Bank Loans, Self-Financing, and Grants in Chinese SOEs: Optimal Policy under Incomplete Information

Research output: Contribution to journalArticle

12 Citations (Scopus)

Abstract

This paper offers a model of the allocation of fund in Chinese state-owned enterprises (SOE) and provides an empirical test of the theory using firm-level data. The paper explains why bank loans and grants coexist with self-financing, which SOEs take out loans, and why subsidies on loan interest payments exist. The model is based on heterogeneous SOEs, asymmetric information, sales taxes, and quota requirements. The results show that reforms of enterprise finance must come as a package, suggesting that the interlocking nature of reform measures should be considered in deciding the direction of further policy modification.J. Comp. Econom.,April 1997,24(2), pp. 140-160. University of Michigan, Ann Arbor, Michigan 48109.

Original languageEnglish
Pages (from-to)140-160
Number of pages21
JournalJournal of Comparative Economics
Volume24
Issue number2
DOIs
StatePublished - 1997 Apr 1

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Bank loans
Incomplete information
Self-financing
Optimal policy
Loans
Sales tax
Firm-level data
Payment
Asymmetric information
Finance
Empirical test
State-owned enterprises
Subsidies

Cite this

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Bank Loans, Self-Financing, and Grants in Chinese SOEs : Optimal Policy under Incomplete Information. / Lee, Young.

In: Journal of Comparative Economics, Vol. 24, No. 2, 01.04.1997, p. 140-160.

Research output: Contribution to journalArticle

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