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Economic Policy Uncertainty, Bank Credit, External Demand, and Corporate Investment

Author

Listed:
  • Wentao GU

    (Institute of Quantitative Economics, Department of statistics, Zhejiang Gongshang University, Hangzhou 310018, China.)

  • Xiaoyan ZHENG

    (Quantitative economics, Department of statistics, Zhejiang Gongshang University, Hangzhou 310018, China.)

  • Liyan PAN

    (Quantitative economics, Department of statistics, Zhejiang Gongshang University, Hangzhou 310018, China.)

  • Hengkui LI

    (Quantitative economics, Department of statistics, Zhejiang Gongshang University, Hangzhou 310018, China.)

Abstract

The studies on economic policy uncertainty are growing recently, since it is an important topic in many economic research areas such as financial crisis, economic forecasting, corporate investment and so on. Using the data of Chinese listed companies from 2004 to 2013 and following the non-dynamic threshold panel model, this study investigates how economic policy uncertainty influences the corporate investment of firms with different external demands through bank credit. To our best knowledge, the research on the influence channel of the bank credit is new in the literature. The effects of economic policy uncertainty on corporate investment through bank credit are obvious, and the effects are more significant for firms with low external demand than those that have high external demand. However, this result is influenced by the varying characteristics of controlling shareholders and industries as well as the different degrees of financial development. The effects of economic policy uncertainty are also significant for state-owned firms, manufacturing firms and high financial development group with low external demand.

Suggested Citation

  • Wentao GU & Xiaoyan ZHENG & Liyan PAN & Hengkui LI, 2018. "Economic Policy Uncertainty, Bank Credit, External Demand, and Corporate Investment," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 52-72, September.
    • Handle: RePEc:rjr:romjef:v::y:2018:i:3:p:52-72
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    More about this item

    Keywords

    economic policy uncertainty; credit channel; firm heterogeneity; external demand; threshold panel model;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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