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An Empirical Test of the "Financial Accelerator" in China: Evidence from the Chinese Industrial Enterprises Database

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  • Jie Chen

    (School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China; China (Shanghai) Pilot Free Trade Zone Subbranch, Shanghai Branch, Bank of Communications, Shanghai 200131, China)

  • Zhe Li

    (School of Economics and Key Laboratory of Mathematical Economics, Shanghai University of Finance and Economics. Shanghai 200433, China)

Abstract

The purpose of this paper is to test the applicability of the "financial accelerator¡± mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the implications of the "financial accelerator¡±. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and subsamples.

Suggested Citation

  • Jie Chen & Zhe Li, 2015. "An Empirical Test of the "Financial Accelerator" in China: Evidence from the Chinese Industrial Enterprises Database," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 10(3), pages 509-526, September.
    • Handle: RePEc:fec:journl:v:10:y:2015:i:3:p:509-526
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-003-014-0022-2
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    Keywords

    Financial Accelerator; Leverage; Chinese Industrial Enterprises Database;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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