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State-owned venture capitals and bank loans in China

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  • Wu, Long
  • Xu, Lei
  • Jiang, Ping

Abstract

Venture capitals (VCs) often do not withdraw upon initial public offerings (IPOs) but continue to have impacts on firm financing behaviour. Through a proprietary dataset of 21,811 firm-year observations on the Shanghai and Shenzhen Stock Exchanges between 2009 and 2018, we examine the impact of VC backup on firm access to bank loans and the underlying mechanism. We confirm that VC backup has significant and positive impact on firm access to bank loans, both short-term and long-term. However, our mechanism tests suggest that the impact, different from current literature, is from VC's state ownership but not from governance or certification effect. Furthermore, rather than state-owned enterprises (SOEs), VC's impact only exists among private firms. VC's state ownership may significantly contribute to firm's better access to bank loans. Our findings are robust after controlling fixed effects, missing variables, sample selection bias, reverse casualties, or other endogeneity issues.

Suggested Citation

  • Wu, Long & Xu, Lei & Jiang, Ping, 2023. "State-owned venture capitals and bank loans in China," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:pacfin:v:77:y:2023:i:c:s0927538x22002189
    DOI: 10.1016/j.pacfin.2022.101923
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    More about this item

    Keywords

    Venture capital; Bank loans; State-ownership;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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