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The misallocation of finance in China.

Authors :
Li, Chenglin
Dong, Xuehan
Qin, Yi
Source :
Finance Research Letters; Jul2024, Vol. 65, pN.PAG-N.PAG, 1p
Publication Year :
2024

Abstract

• We find that, following the 2008 global financial crisis, there was a rapid increase in overall financial misallocation among enterprises. • The degree of financial misallocation across regions varies considerably, with the western region the largest, followed by the central region and the eastern region the smallest. • Compared to non-advanced manufacturing enterprises, firms in advanced manufacturing industries experience a higher degree of financial misallocation. • Financial misallocation plays mediating roles between government debt or house price and economic growth or employment. This study documents the financial misallocation in China from 2000 to 2022. We find that, following the 2008 global financial crisis, there was a rapid increase in overall financial misallocation among enterprises. The degree of financial misallocation across regions varies considerably, with the western region the largest, followed by the central region and the eastern region the smallest. Compared to non-advanced manufacturing enterprises, firms in advanced manufacturing industries experience a higher degree of financial misallocation. Lastly, we briefly explore the mediating role of financial misallocation at the macroeconomic level. This study contributes to a deeper understanding of financial misallocation in developing countries. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
15446123
Volume :
65
Database :
Supplemental Index
Journal :
Finance Research Letters
Publication Type :
Academic Journal
Accession number :
177751661
Full Text :
https://doi.org/10.1016/j.frl.2024.105578