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Corporate Investment during the Financial Crisis: Evidence from China

Bo, Hong and Driver, Ciaran and Lin , Hsiang-Chun Michael (2014) 'Corporate Investment during the Financial Crisis: Evidence from China.' International Review of Financial Analysis, 35 (2014). pp. 1-12.

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Abstract

China’s growth model suggests that the 2008 financial crisis may have affected the Chinese economy differently from what one observes in mature market economies. In this paper, we examine how Chinese corporate investment responded to the financial crisis by using 1689 listed nonfinancial firms during Q12006-Q32010. We document that (1) the overall impact of the financial crisis on Chinese corporate investment is negative; (2) among three channels conveying the effect of the financial crisis, namely, the demand channel, the financial constraints channel, and the uncertainty channel, the demand channel dominates; (3) financial assets held by a nonfinancial firm are important in explaining the firm’s fixed investment behaviour; (4) as compared to non-state firms, state-controlled firms are less affected by the financial crisis and more active in engaging in financial assets investment; (5) foreign ownership can be seen as a buffer against the negative effect of the financial crisis and foreign-involved Chinese firms are less active in financial assets investment as compared to domestic firms.

Item Type: Journal Article
SOAS Departments & Centres: Departments and Subunits > School of Finance & Management
Legacy Departments > Faculty of Law and Social Sciences > School of Finance and Management
ISSN: 10575219
DOI (Digital Object Identifier): 10.1016/j.irfa.2014.07.002
Depositing User: Hong Bo
Date Deposited: 29 Dec 2014 15:32
URI: http://eprints.soas.ac.uk/id/eprint/19341

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