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Human capital in the financial sector and corporate debt maturity

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  • Liu, Guanchun
  • Liu, Yuanyuan
  • Zhang, Chengsi

Abstract

This study examines how human capital in the financial sector affects corporate debt maturity. To illustrate the mechanisms underlying the effects, we propose a theoretical framework that highlights the effects of human capital in the financial sector on mitigating the information asymmetry between financial intermediaries, households, and firms. Using the Chinese National Economic Census in 2008 and the Industrial Enterprises Database over 2011–2013, we find that the financial sector's human capital plays a significant and positive (negative) role in short-term (long-term) debt and this effect is more pronounced for firms with greater information asymmetry. Further analyses demonstrate that the baseline findings are consistent with the credit supply hypothesis. Our study indicates that human capital in the financial sector strengthens its renegotiation capacity for corporate borrowing, which is consistent with China's financial repression policy and leads to increased exposure of firms to credit and liquidity risks.

Suggested Citation

  • Liu, Guanchun & Liu, Yuanyuan & Zhang, Chengsi, 2021. "Human capital in the financial sector and corporate debt maturity," China Economic Review, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000705
    DOI: 10.1016/j.chieco.2021.101652
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    More about this item

    Keywords

    Financial sector's human capital; Corporate debt maturity; Credit supply; China;
    All these keywords.

    JEL classification:

    • 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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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