Financing Source and Firm Growth in a Hybrid Financial System: Evidence from China

44 Pages Posted: 27 Nov 2007 Last revised: 4 Sep 2008

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Jun Du

Aston University, Aston Business School, Economics and Strategy

Date Written: August 30, 2008

Abstract

Using a comprehensive firm-level dataset spanning the period 1998-2005, this paper depicts a detailed picture of China's financial sectors and industrial firms' financing pattern, and provides a thorough investigation of the relationship between financing source and firm growth. We take into account firm surviving selectivity and reverse causality of firm financing source into account, and find that financing source matters for firm growth in China, although this does not tell the whole story. The relative importance of the different financing sources depends on firm ownership and growth channel. We find strong complementarities between formal financing channels and informal ones, and between domestic finance and foreign investment in promoting firm's growth.

Keywords: China, financing source, growth

JEL Classification: O5 G21 G28

Suggested Citation

Girma, Sourafel and Du, Jun, Financing Source and Firm Growth in a Hybrid Financial System: Evidence from China (August 30, 2008). Available at SSRN: https://ssrn.com/abstract=1032942 or http://dx.doi.org/10.2139/ssrn.1032942

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Jun Du

Aston University, Aston Business School, Economics and Strategy ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom
004401212043340 (Phone)

HOME PAGE: http://www.abs.aston.ac.uk/newweb/staff/detail.asp/sfldStaffID=A0000717

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