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Internal Finance and Growth: Microeconometric Evidence on Chinese Firms

Guariglia, A.; Liu, X; Song, L.

Authors

A. Guariglia

X Liu

L. Song



Abstract

Using a panel of 79,841 Chinese firms over the period 2000–2007, we examine the extent to which liquidity constraints affect firms' assets growth. We find that state owned enterprises are not affected, while the availability of internal finance represents a binding constraint for the growth of private firms, especially those operating in coastal regions, with negligible foreign ownership. Thanks to their high productivity, cash flow is, however, so abundant for these firms that they are able to grow at a very fast rate, despite being discriminated against by financial institutions. Hence, well developed external capital markets may not always be needed for fast economic growth.

Citation

Guariglia, A., Liu, X., & Song, L. (2011). Internal Finance and Growth: Microeconometric Evidence on Chinese Firms. Journal of Development Economics, 96(1), 79-94. https://doi.org/10.1016/j.jdeveco.2010.07.003

Journal Article Type Article
Publication Date Sep 1, 2011
Deposit Date Jul 21, 2011
Journal Journal of Development Economics
Print ISSN 0304-3878
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 96
Issue 1
Pages 79-94
DOI https://doi.org/10.1016/j.jdeveco.2010.07.003
Keywords Assets growth, Cash flow, Financial constraints.
Public URL https://durham-repository.worktribe.com/output/1538491

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