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Default and Bankruptcy Resolution in China

Author

Listed:
  • Edith Hotchkiss

    (Carroll School of Management, Boston College, Boston, Massachusetts, USA)

  • Kose John

    (Stern School of Business, New York University, New York, USA)

  • Bo Li

    (PBC School of Finance, Tsinghua University, Beijing, China)

  • Jacopo Ponticelli

    (Kellogg School of Management, Northwestern University, Evanston, Illinois, USA)

  • Wei Wang

    (Smith School of Business, Queen's University, Kingston, Ontario, Canada)

Abstract

In this article, we review the literature on the recent growth of corporate debt in China and present stylized facts on the evolution of debt composition, nonperforming loans, defaults, and bankruptcy filings. We then describe the legal and political institutions that characterize the system for restructuring and liquidating financially distressed firms, including recent reforms of China's bankruptcy law. Finally, we discuss the main challenges faced by China in the implementation of these reforms, including frictions in judicial enforcement. We also propose potential avenues for future research.

Suggested Citation

  • Edith Hotchkiss & Kose John & Bo Li & Jacopo Ponticelli & Wei Wang, 2023. "Default and Bankruptcy Resolution in China," Annual Review of Financial Economics, Annual Reviews, vol. 15(1), pages 369-385, November.
    • Handle: RePEc:anr:refeco:v:15:y:2023:p:369-385
    DOI: 10.1146/annurev-financial-110921-014557
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    More about this item

    Keywords

    bankruptcy law; nonperforming loans; shadow banks; bond markets; default; restructuring;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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