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Does Bank Loan Ratio Affect Investment of China's Listed Companies?

Author

Listed:
  • Yuan Yuan

    (The University of Tokyo)

  • Kazuyuki Motohashi

    (The University of Tokyo)

Abstract

In this paper, we analyze whether the total debt ratios and bank loan ratios of Chinese listed companies had any impact on their fixed investment in 2001-2006, and whether this impact, if it existed, differed among companies with differing investment opportunities. The analysis led to the interesting result that the bank loan ratio had a stronger impact on fixed investment than the total debt ratio, and actually had the strong effect of restraining investment particularly by low-growth companies, implying that in China, banks supervise the investment activities of companies more strongly.

Suggested Citation

  • Yuan Yuan & Kazuyuki Motohashi, 2010. "Does Bank Loan Ratio Affect Investment of China's Listed Companies?," Economics Bulletin, AccessEcon, vol. 30(2), pages 1173-1181.
    • Handle: RePEc:ebl:ecbull:eb-09-00617
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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P110.pdf
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    Cited by:

    1. Tsapin Andriy & Tsapin Oleksandr, 2014. "Corporate Investment and Financial Crisis: Can Under- and Overinvestment Be Mitigated by Banks in an Emerging Market?," EERC Working Paper Series 14/04e, EERC Research Network, Russia and CIS.

    More about this item

    Keywords

    JEL: G31; G32; D92;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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