China’s Anti-Corruption Campaign and Credit Reallocation from SOEs to Non-SOEs
69 Pages Posted: 1 Feb 2017 Last revised: 6 Jul 2018
Date Written: July 6, 2018
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
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