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Investor-enterprise interactions and shadow banking of non-financial enterprises in China

Author

Listed:
  • Liu, Huan
  • Tao, Yunqing
  • Zeng, Lin
  • Chen, Dong

Abstract

Using the data of China A-share non-financial Enterprises from 2010 to 2019, this paper studies the impact of investor-firm interaction on shadow banking of non-financial enterprises in China. We find that the investor-enterprise interactions have a negative effect on shadow banking of non-financial enterprises, which still hold after robustness tests and endogeneity tests. In addition, our findings are more pronounced in non-state-owned enterprises and enterprises with high financial constraints. Finally, the mechanism tests show that investor-enterprise interactions can reduce the size of shadow banking through external governance channel and information asymmetry channel. Our study confirms that the interactions between retail investors and firms, exert governance effects on corporate decision-making, which has significant implications for the development of capital markets in emerging economies.

Suggested Citation

  • Liu, Huan & Tao, Yunqing & Zeng, Lin & Chen, Dong, 2023. "Investor-enterprise interactions and shadow banking of non-financial enterprises in China," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003513
    DOI: 10.1016/j.frl.2023.103979
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    References listed on IDEAS

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    Cited by:

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    5. Zhao, Yujie & Yao, Zhanghao & Li, Yuanqin & Zhou, Ping, 2023. "Can high-quality interactions lower the cost of debt? Insights from interactive investor platforms," Finance Research Letters, Elsevier, vol. 58(PC).

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    More about this item

    Keywords

    Investor-enterprise interactions; Shadow banking of non-financial enterprises; External governance; Information asymmetry;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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