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Who Bears Risk in China's Non-financial Enterprise Debt?

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  • Anderson, Ronald

Abstract

This paper analyses of how risk is allocated in China's markets for debt issued by non-financial enterprises. Compared to other major corporate bond markets China's is unusual in that unlisted, state-owned enterprises account for a large fraction of the debt issued and that the foundations of the corporate and bankruptcy law are young and still evolving. The implications of these features are described and quantified. The results show that the major changes in relative pricing across different market segments cannot be explained well by standard measures of solvency and liquidity. Rather, the most successful explanation is that major policy actions have had the effect of withdrawing implicit guarantees from private issuers and making more explicit the limits of guarantees afforded to state issuers.

Suggested Citation

  • Anderson, Ronald, 2020. "Who Bears Risk in China's Non-financial Enterprise Debt?," CEPR Discussion Papers 15135, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15135
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate bonds; Chinese securities markets; Implicit guarantees; State capitalism; Bankruptcy reform;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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