| ID | 156455 |
| Title Proper | Financing and monitoring in an emerging economy |
| Other Title Information | can investment efficiency be increased? |
| Language | ENG |
| Author | Sarwar, Suleman ; Khan, Muhammad Kaleem |
| Summary / Abstract (Note) | This study investigates the influence of the financial system on firms' investment efficiency in China. For this purpose, we employ country level data of capital markets and financial institutions along with financial data from 2797 Chinese firms in the period from 1998 to 2015. The firms are priori classified into four groups, by high and low values of financial constraints and agency problems. Results show that financial development influences firms' investments positively either directly or by reducing cash flow sensitivity. The impact remains the same for all types of firms. Moreover, the financial structure has an impact on investment efficiency of firms; this result also remains the same even after controlling levels of financial development. Study contributes that capital market based financial structure impacts investment decisions by reducing financing constraints and agency issue due to its strong monitoring ability. |
| `In' analytical Note | China Economic Review , No.45; Sep 2017: p.62-77 |
| Journal Source | China Economic Review 2017-09 |
| Key Words | Investments ; Financial Development ; Financial Structure ; Financing Constraints ; Agency Cost |