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ID: 123333

Choice of corporate debt in China: the role of state ownership / Pessarossi, Pierre; Weill, Laurent

Pessarossi, Pierre	Journal Article
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2013.

Summary/Abstract

We analyze the factors affecting the decisions of Chinese firms to take on debt in the form of either bonds or syndicated loans over the period of 2006-2010. The study reveals the extent to which corporate debt choices are politically or economically driven. We test if central government ownership, flotation costs, asymmetries of information, and renegotiation and liquidation costs influence the choice of debt. We find evidence in favor of the influence of central government ownership on the financing choices of firms because Central State owned firms are more likely to issue bonds and to borrow uniquely on the bond market, rather than tapping both debt markets. Overall, our findings show that financial factors play a much more minor role in corporate debt choices compared to other countries, whereas central government ownership is a key determinant of preference for the bond market.

Key Words

China ; State Ownership ; Corporate Bonds ; Syndicated Loans ; Debt Choice

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ID: 124551

Is bank competition detrimental to efficiency?: evidence from China / Fungacova, Zuzana; Pessarossi, Pierre; Weill, Laurent

Pessarossi, Pierre	Journal Article
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Publication

2013.

Summary/Abstract

This paper addresses the relationship between bank competition and efficiency by computing Lerner indices and cost efficiency scores for a sample of Chinese banks over the period 2002-2011. Granger-causality tests are performed in a dynamic GMM panel estimator framework to evaluate the sign and direction of causality between them. We observe no increase in bank competition over the period, even as cost efficiency improves. In a departure from the empirical literature showing that competition negatively Granger-causes cost efficiency for Western banks, we find no significant relation between competition and efficiency. This suggests that measures to increase bank competition in the Chinese context are not detrimental to efficiency.

Key Words

China ; Economic Growth - China ; Bank ; Western Bank ; Competition - Economics ; Economic Efficiency ;
Financial System - China

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