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Does support from government help firms survive? Evidence on financial and political assistance in China, 1998–2007.

Qu, T. and Harris, R. (2019) 'Does support from government help firms survive? Evidence on financial and political assistance in China, 1998–2007.', Applied economics., 51 (5). pp. 528-541.

Abstract

Using the National Bureau of Statistics data set over the period 1998–2007, this article examines the dual roles of financial assistance and strong political links on firm survival in China by applying a semi-parametric duration model. We find that generally either financial assistance or strong political links had a positive effect on the likelihood of firm survival. Furthermore, if firms received both types of support from government, their survival rate was around two times as high compared to only receiving a single support. The likelihood of survival depended on the amount of assistance a firm received. We also find firm ownership impacts on its survival pattern. Lastly, China joining the World Trade Organisation (WTO) coincided with (cet. par.) higher firm failure, especially with regard to state-owned firms; however, this period also saw the authorities targeting political and financial help on the ‘better’ firms (especially SOEs) with characteristics likely to increase their chance of survival.

Item Type:Article
Full text:(AM) Accepted Manuscript
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1080/00036846.2018.1494816
Publisher statement:This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 31 Aug 2018, available online: http://www.tandfonline.com/10.1080/00036846.2018.1494816
Date accepted:22 June 2018
Date deposited:26 June 2018
Date of first online publication:31 August 2018
Date first made open access:29 February 2020

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