Financial Constraints in China: the conditioning effect of FDI and State-Owned corporate sector

Sandra Poncet (1) , Walter Steingress (2) , Hylke Vandenbussche (2)

1 CES - Centre d'économie de la Sorbonne
2 CORE - Center of Operation Research and Econometrics [Louvain]

Using a unique micro-level data set over the period 1998-2005 on Chinese firms, this paper presents empirical findings on the presence of credit constraints. Our findings are threefold. Firstly, private Chinese firms are credit constrained while state-owned firms and foreign-owned firms in China are not; Secondly, the geographical and sectoral presence of foreign capital alleviates credit constraints faced by private Chinese firms. Thirdly, geographical and sectoral presence of state firms aggravates financial constraints for private Chinese firms ("crowding out").

Mots clés: Investment-cash flow sensitivity; China; Firm-level data; Foreign direct investment

Domaines: Economies et finances

Sandra Poncet, Walter Steingress, Hylke Vandenbussche. Financial Constraints in China: the conditioning effect of FDI and State-Owned corporate sector. China Economic Review, 2010, 21 (3), pp.411-422. ⟨10.1016/j.chieco.2010.03.001⟩. ⟨hal-00633806⟩