TY - JOUR
T1 - To what extent did the economic stimulus package influence bank lending and corporate investment decisions? Evidence from China
AU - Liu, Qigui
AU - Pan, Xiaofei
AU - Tian, Gary Gang
PY - 2018/1
Y1 - 2018/1
N2 - Using a panel of Chinese firms over the period 2003-2013, we show that, from the supply-side perspective, as a result of the implementation of the economic stimulus package in China, state-owned enterprises (SOEs) received more bank loans and invested more than non-SOEs. We further find that after the implementation of the economic stimulus package, bank lending became less responsive to firm profitability, and firm investments became less responsive to investment opportunities for SOEs, non-SOEs from favoured industries and regions, and non-SOEs with political connections. Overall, our findings support the view that the stimulus package and the associated increase in bank loan supply in China resulted in more resources being allocated to SOEs.
AB - Using a panel of Chinese firms over the period 2003-2013, we show that, from the supply-side perspective, as a result of the implementation of the economic stimulus package in China, state-owned enterprises (SOEs) received more bank loans and invested more than non-SOEs. We further find that after the implementation of the economic stimulus package, bank lending became less responsive to firm profitability, and firm investments became less responsive to investment opportunities for SOEs, non-SOEs from favoured industries and regions, and non-SOEs with political connections. Overall, our findings support the view that the stimulus package and the associated increase in bank loan supply in China resulted in more resources being allocated to SOEs.
KW - Bank lending
KW - Bank loan supply
KW - Economic stimulus package
KW - Investment decisions
KW - SOEs
UR - http://www.scopus.com/inward/record.url?scp=85006700454&partnerID=8YFLogxK
U2 - 10.1016/j.jbankfin.2016.04.022
DO - 10.1016/j.jbankfin.2016.04.022
M3 - Article
AN - SCOPUS:85006700454
SN - 0378-4266
VL - 86
SP - 177
EP - 193
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
ER -