China’s Anti-Corruption Campaign and Credit Reallocation from SOEs to Non-SOEs

69 Pages Posted: 1 Feb 2017 Last revised: 6 Jul 2018

See all articles by Bo Li

Bo Li

Tsinghua University - PBC School of Finance

Zhengwei Wang

Tsinghua University - PBC School of Finance

Hao Zhou

Tsinghua University - PBC School of Finance

Date Written: July 6, 2018

Abstract

We provide a novel empirical finding that the recent anti-corruption investigations in China are associated with credit reallocation from less productive, state-owned enterprises (SOEs) to more productive, non-SOEs. The empirical strategy exploits staggered investigations as exogenous shocks to bank loan issuance among rival firms in affected industry. The main finding extends to implicated firms and non-affected industries, proves strong for extensive margins and a supply shock, and remains solid for stock market reactions. We further single out the economic efficiency channel, and to a lesser extent, the political connection channel, through which the anti-corruption campaign leads to improved credit reallocation.

Keywords: anti-corruption, credit reallocation, state ownership, economic efficiency, political connection

JEL Classification: G30, G32, G34, P26

Suggested Citation

Li, Bo and Wang, Zhengwei and Zhou, Hao, China’s Anti-Corruption Campaign and Credit Reallocation from SOEs to Non-SOEs (July 6, 2018). PBCSF-NIFR Research Paper No. 17-01. Available at SSRN: https://ssrn.com/abstract=2908658 or http://dx.doi.org/10.2139/ssrn.2908658

Bo Li (Contact Author)

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China
+86 10-627982146 (Phone)

Zhengwei Wang

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China

Hao Zhou

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China
86-10-62790655 (Phone)

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