Source of Finance, Growth and Firm Size - Evidence from China

Posted: 25 Nov 2008

See all articles by Jun Du

Jun Du

Aston University, Aston Business School, Economics and Strategy

Sourafel Girma

Nottingham University Business School

Date Written: November 1, 2008

Abstract

Using a comprehensive firm-level dataset spanning the period 1998-2005, this paper provides a thorough investigation of the relationship between firm size, total factor productivity growth and financial structure in China, controlling for the endogeneity of the latter. Generally, it finds financing source matters for firms of different size, and the extent to which financing source matters for firm growth is greater for small firms than big firms. Self-raised finance appears to be most effective in promoting small firms to grow, and bank loan seems to be more supportive to big firms. The relationship between size, finance and growth also depends on ownership. In addition, there exist strong complementarities between formal and informal finance, as well as between indigenous and foreign finance.

Keywords: China, finance, firm size, growth

JEL Classification: O5, G2, L11, L25, O1

Suggested Citation

Du, Jun and Girma, Sourafel, Source of Finance, Growth and Firm Size - Evidence from China (November 1, 2008). Available at SSRN: https://ssrn.com/abstract=1306309

Jun Du (Contact Author)

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

Sourafel Girma

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/

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