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Online judicial auction, loan availability, and corporate investment in China

Author

Listed:
  • Ye, Yongwei
  • Kong, Dongmin
  • Li, Renzhi
  • Li, Xiaofan
  • Tao, Yunqing

Abstract

Online judicial auctions can significantly impact corporate investment by enhancing creditor protection and facilitating loan availability. Using a dynamic difference-in-differences strategy, we find that the reform significantly boosts corporate investment. Mechanism tests reveal that the reform boosts corporate investment by improving corporate loan availability and creditors' willingness to lend. The effect is more pronounced in regions with high judicial auction turnover, high public participation, poorer legal environments, and lower banking competition, suggesting that these reforms enhance legal system efficiency and market competition. Additionally, we find that judicial auction reform reduces firms’ precautionary savings and fosters regional economic development. Overall, our study contributes to understanding the important role of creditor protection in corporate investment and provides insights for implementing digital judicial reforms.

Suggested Citation

  • Ye, Yongwei & Kong, Dongmin & Li, Renzhi & Li, Xiaofan & Tao, Yunqing, 2024. "Online judicial auction, loan availability, and corporate investment in China," The British Accounting Review, Elsevier, vol. 56(6).
    • Handle: RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924002646
    DOI: 10.1016/j.bar.2024.101487
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    More about this item

    Keywords

    Online judicial auction; Corporate investment; Loan availability; Creditor's right protection;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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