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ID:
182747
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| Summary/Abstract |
Financial constraint is a significant obstacle for firm growth, especially in developing countries where credit is scarce. This paper explores the role of tax policy in relaxing firms' financial constraints by exploiting China's value-added tax (VAT) reform that was initiated in 2004 and completed in 2009. We use a quasi-experimental method and Annual Survey of Industrial Firms (ASIF) data from 2000 to 2009 to estimate the VAT reform's policy effects on financial constraints. We show that the VAT reform significantly improves firms' external financing capacity by decreasing borrowing costs and promoting commercial credit. The findings are robust to alternative specifications but show heterogeneity across ownerships, firm sizes, regions, and between export and non-export firms. Our analysis suggests tax deduction is useful to relax firms' financial constraints.
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| 2 |
ID:
159052
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| Summary/Abstract |
Recent empirical studies suggest that the negative correlation between the quantity of children within a family and their educational attainment, which is widely observed in developed countries, is inconsistent or even rejected in developing countries. This paper aims to integrate these divergent empirical results into a unified theoretical framework by introducing scale economies into the classical model of Becker and Lewis (1973). As a result, the “anomaly” of an observed upward or an inverted U-shaped relationship can be expected as the scale economies effect dominates when there are few children in a family. Using data from the China's 1990 and 2000 censuses, this study further tests some hypotheses induced from the model. Educational attainment increases with sibling size at first and then drops. Children with one or two siblings achieve the highest education during the period our sample covers. The inverted U-shaped correlation is more robust for rural subsamples, for older cohorts and for economically underdeveloped regions and groups, which is consistent with the prediction of the model.
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| 3 |
ID:
191147
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| Summary/Abstract |
This paper improves the estimation of firm-level total factor productivity (TFP) by considering energy use and including small- and medium-sized enterprises using data from the Chinese National Tax Survey Database (2008–2011). It analyzes the production efficiency of Chinese manufacturing firms using the improved TFP data and finds that (i) the TFP data frequently used in previous studies overestimated firms' real production efficiency; (ii) the TFP of manufacturing firms decreased from 2008 to 2011 due to declines in both technical efficiency and allocation efficiency; (iii) the lower capacity utilization of production factors led to lower technical efficiency; and (iv) allocation efficiency decreased more in provinces and industries with higher shares of state-owned enterprises. The findings have policy implications for enhancing growth potential in the long run.
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| 4 |
ID:
159064
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| Summary/Abstract |
The problems of over-capacity and zombie firms in China's manufacturing attract all aspects of attention, but academic analysis is still absent. Using firm-level data of Chinese manufacturing, this study first documents the problems of over-capacity and zombie firms during 2011–2013. We find that the over-capacity problem is much more severe in the northeastern and western regions of China, in heavy chemical industries, and in state-owned sector. The distribution of zombie firms is in a similar manner across region, industry and ownership. We also empirically test the relationship between zombie firms and over-capacity, finding that zombie firms cause and worsen over-capacity by crowding out healthy firms.
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