Inside the black box : Bank credit allocation in China's private sector

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

206 Scopus Citations
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Author(s)

  • Michael Firth
  • Chen Lin
  • Ping Liu
  • Sonia M.L. Wong

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)1144-1155
Journal / PublicationJournal of Banking and Finance
Volume33
Issue number6
Publication statusPublished - Jun 2009

Abstract

This study examines how the Chinese state-owned banks allocate loans to private firms. We find that the banks extend loans to financially healthier and better-governed firms, which implies that the banks use commercial judgments in this segment of the market. We also find that having the state as a minority owner helps firms obtain bank loans and this suggests that political connections play a role in gaining access to bank finance. In addition, we find that commercial judgments are important determinants of the lending decisions for manufacturing firms, large firms, and firms located in regions with a more developed banking sector; political connections are important for firms in service industries, large firms, and firms located in areas with a less developed banking sector. © 2009 Elsevier B.V. All rights reserved.

Research Area(s)

  • Bank loans, China, Lending decisions, Private sector

Citation Format(s)

Inside the black box : Bank credit allocation in China's private sector. / Firth, Michael; Lin, Chen; Liu, Ping; Wong, Sonia M.L.

In: Journal of Banking and Finance, Vol. 33, No. 6, 06.2009, p. 1144-1155.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal