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Major risk shocks, financial relief policies and loan maturity for MSMEs: Evidence from China

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  • Shui, Bingbing

Abstract

This paper shows the effect of banking sector financial relief policies on the loan maturity of MSMEs under a major risk shock. Using 259 loan samples from China both before and after the outbreak of COVID-19, I find that financial relief policies reduced the loan maturity of MSMEs by an average of 4%. Two mechanisms are involved:the proportion of bank liquidity loans increased; banks shortened the loan maturity to respond to the increase in risk-taking of their own. This study provides an example of how macroeconomic policies influence micro-behavior in bank lending decisions.

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  • Shui, Bingbing, 2023. "Major risk shocks, financial relief policies and loan maturity for MSMEs: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PA).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002751
    DOI: 10.1016/j.frl.2023.103903
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    2. Jin, Qichao & Sun, Lei & Chen, Yanyu & Hu, Zhao-Long, 2024. "Financial risk contagion based on dynamic multi-layer network between banks and firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 638(C).

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