TY - JOUR
T1 - Internal finance and growth
T2 - Microeconometric evidence on Chinese firms
AU - Guariglia, Alessandra
AU - Liu, Xiaoxuan
AU - Song, Lina
N1 - Funding Information:
We thank three anonymous referees, E. Cannon, M. Chen, S. Fazzari, H. Kruiniger, B. Fleischer, M. Marchica, P. Mizen, R. Mura, L. Parisi, Y. Yao, and the participants to seminars at the Universities of Bath, Bristol, Durham, Manchester, and Newcastle; and to the 2007 workshop on the use of panel data in macroeconomics and finance organized by the Money, Macro and Finance Research Group, the 19th UK Chinese Economic Association Annual Conference, the “Microeconomic Drivers of Growth in China” Oxford Conference, and the “Post-Olympic China: Globalisation and Sustainable Development after three Decades of Reform” Nottingham Conference for helpful comments. A. Guariglia and L. Song gratefully acknowledge the financial support from the University of Nottingham Research on and in Asia Fund ASIA4246 , and from the Leverhulme Trust under Programme Grant F/00 114/AM .
PY - 2011/9
Y1 - 2011/9
N2 - 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.
AB - 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.
KW - Assets growth
KW - Cash flow
KW - Financial constraints
UR - http://www.scopus.com/inward/record.url?scp=79955987907&partnerID=8YFLogxK
U2 - 10.1016/j.jdeveco.2010.07.003
DO - 10.1016/j.jdeveco.2010.07.003
M3 - Article
AN - SCOPUS:79955987907
SN - 0304-3878
VL - 96
SP - 79
EP - 94
JO - Journal of Development Economics
JF - Journal of Development Economics
IS - 1
ER -
