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Regional Disparities And Investment–Cash Flow Sensitivity: Evidence From Chinese Listed Firms

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  • Jianjun Sun
  • Nobuyoshi Yamori

Abstract

In China, regional disparities are significant. We find that firms in inland regions rely more on their internal funds in terms of their investment activities than those in coastal regions, and that the sensitivity gap between inland and coastal firms widened in the recent contractionary monetary policy period. This suggests that firms in inland regions find it harder to obtain outside funds due to the unfavourable social and economic environments they face. Our findings suggest that capital markets in China respond rationally to the potential impact of regional disparities on a firm's performance.

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  • Jianjun Sun & Nobuyoshi Yamori, 2009. "Regional Disparities And Investment–Cash Flow Sensitivity: Evidence From Chinese Listed Firms," Pacific Economic Review, Wiley Blackwell, vol. 14(5), pages 657-667, December.
    • Handle: RePEc:bla:pacecr:v:14:y:2009:i:5:p:657-667
    DOI: 10.1111/j.1468-0106.2009.00477.x
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    2. Chen, Xiang & Wu, Xin, 2020. "What factor contributes to productivity growth of Chinese city banks: The role of regional difference," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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