The influence of economic institution on finance sector credit allocation in China

Zhao, Li

doi:10.1080/1331677x.2021.1931915

Cited by 6 publications

(4 citation statements)

References 29 publications

(27 reference statements)

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“…Although this seems “cruel”, it is consistent with China’s reality. Some Chinese researchers offered evidence in support of property right nature heterogeneity when they observed non-state-owned enterprises improved investment efficiency through mixed-ownership reform, and the mechanism reduced financing constraints, which improved “discrimination” to a certain extent [ 48 , 49 ]. In previous studies, size heterogeneity is usually reflected between large and medium enterprises, while the difference between medium and small (micro) enterprises is rarely discussed.…”

Section: Empirical Research: Model and Resultsmentioning

confidence: 99%

Can SMEs benefit equally from supportive policies in China?

Zhang

Wang

2023

PLoS ONE

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This paper applies quantitative and narrative approaches to fiscal and financial policies of Chinese small and medium enterprises (SMEs) in order to study the support effect of macro policies on micro enterprises. As the first researchers to focus on the firm heterogeneity of SMEs’ policy effects, we show that the “flood irrigation” supportive policies for SMEs have not achieved the expected “help the weaker” effect. Non-state-owned SMEs and small(micro) enterprises have a low sense of policy gain, which is contrary to some “positive” research conclusions from China. The mechanism study found that “ownership” and “scale” discrimination suffered by non-state-owned and small(micro) enterprises in the financing process are key. We suggest the supportive policies for SMEs should shift from “flood” to “precise drip” irrigation. The policy benefits of non-state-owned, small and micro enterprises need to be emphasized. More targeted policies need to be studied and provided. Our findings shed new light on the formulation of supportive policies for SMEs.

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Section: Empirical Research: Model and Resultsmentioning

confidence: 99%

Can SMEs benefit equally from supportive policies in China?

Zhang

Wang

2023

PLoS ONE

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“…Thus, financial capacity has a significant influence on M&As, which is consistent with [ 28 , 29 ]. However, under the traditional financing model, the financing needs of most enterprises cannot be met due to a credit mismatch [ 30 ]. To be more specific, there are two main types of mismatches: supply and demand mismatch and domain mismatch.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

Digital finance and M&As: An empirical study and mechanism analysis

et al. 2023

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With the rapid growth and wide application of digital technology, enterprises have entered the digital era with both opportunities and challenges existing. Mergers and acquisitions are one of the most efficient ways to integrate resources and achieve profit growth, giving enterprises advantages in competing in the new mode of economic growth. Based on this, this research tries to explore whether the development of digital finance will contribute to the emergence of M&As activities through combining M&As data of the Chinese stock market with the digital finance inclusion index between 2012 and 2020. The results show that the development of digital finance largely influences M&As activities through lower acquirers’ financial constraints. We further replace digital finance with three sub-indexes including coverage breadth, usage depth, and digitalization level to explore the impact of different dimensions of digital finance on M&As. Results show that coverage breadth plays a more important role. In addition, heterogeneity tests reveal that the relationship between the development of digital finance and M&As activities varies significantly. The influences of digital finance on private and western and central enterprises are more significant compared with state-owned and eastern enterprises. According to the study, since the development of digital finance can be an efficient way to ease financial constraints and boost M&As activities, the government should promote the development of digital finance while companies strive to make the most use of it.

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“…In China, institutional investors may mostly be government-related; hence, the monitoring effect would dominate. The involvement of the Chinese government in ownership and control improves firmsʼ corporate governance, develops market and legal regulations (Qian, 2001), and enables firms to achieve sustainable growth (Li, 2021). In China, the perception is that a high equity stake by the state lowers uncertainties about the firm value (Mok & Hui, 1998).…”

Section: Introductionmentioning

confidence: 99%

“…In China, the perception is that a high equity stake by the state lowers uncertainties about the firm value (Mok & Hui, 1998). Therefore, government intervention and ownership relationships are the main factors affecting the efficiency of capital allocation in China (Li, 2021). In this argument, it is contended that domestic investors interpret a high percentage of equity retention as confidence in the firm in an emerging market with high information asymmetry.…”

Section: Introductionmentioning

confidence: 99%

Institutional Ownership, Capital Structure and Performance of SMEs in China

Duppati,

Gulati,

Matlani

et al. 2023

South Asian Journal of Macroeconomics and Public Finance

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This article examines the relationship between ownership, leverage, and performance for Chinese small and medium enterprises (SMEs). Our study sheds light on how institutional ownership affects the performance of Chinese SMEs. We use agency and the pecking order perspective as background theories for analysing the relationships between institutional ownership, capital structure, and firm performance. We use a range of regression estimations for robustness checks and include Quantile regression, static and dynamic panel regression models, and a two-step system Generalized Method of Moments (GMM) approach to explore data covering 2009–2015. Our findings show that institutional investor’s ownership affects the performance of Chinese SMEs positively and significantly. The negative relationship between leverage and performance indicates the dominance of family ownership in Chinese SMEs, where firms rely more on retained earnings for financing, which aligns with the pecking order theory (POT) perspective. The results also suggest that institutional ownership could mitigate agency issues in Chinese SMEs. JEL Classification: G30, G38, G39

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The influence of economic institution on finance sector credit allocation in China

Cited by 6 publications

References 29 publications

Can SMEs benefit equally from supportive policies in China?

Can SMEs benefit equally from supportive policies in China?

Digital finance and M&As: An empirical study and mechanism analysis

Institutional Ownership, Capital Structure and Performance of SMEs in China

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