Corporate Default with Chinese Characteristics

86 Pages Posted: 19 Apr 2017 Last revised: 7 Jul 2017

See all articles by Jing Ai

Jing Ai

University of Hawaii at Manoa - Shidler College of Business

Warren Bailey

Cornell University; Fudan University - Fanhai International School of Finance and China Institute of Economics and Finance

Haoyu Gao

Central University of Finance and Economics (CUFE)

Xiaoguang Yang

Chinese Academy of Sciences (CAS)

Lin Zhao

Chinese Academy of Sciences (CAS) - Academy of Mathematics and Systems Science

Date Written: July 6, 2017

Abstract

We study lending, default, and default resolution with seven million loans by seventeen commercial banks to corporations across China from 2007 to 2013. Politically connected borrowers perform poorly on several dimensions of the lending process, even with improvements in bankruptcy law, government action at times of crisis, or listing on China's stock market. In contrast, evidence of relationship banking and improvements in some lending outcomes for other borrowers and in provinces with higher institutional and economic development suggest gradual though uneven emergence of a modern capital market.

Keywords: bank loans, relationship banking, corporate default, government bailout, China, politically-connected firms, state-owned enterprises

JEL Classification: G21, G28, G33, G38

Suggested Citation

Ai, Jing and Bailey, Warren B. and Gao, Haoyu and Yang, Xiaoguang and Zhao, Lin, Corporate Default with Chinese Characteristics (July 6, 2017). Available at SSRN: https://ssrn.com/abstract=2955110 or http://dx.doi.org/10.2139/ssrn.2955110

Jing Ai

University of Hawaii at Manoa - Shidler College of Business ( email )

2404 Maile Way
Honolulu, HI 96822
United States

Warren B. Bailey (Contact Author)

Cornell University ( email )

S. C. Johnson Graduate School of Management
387 Sage Hall
Ithaca, NY 14853-6201
United States
607-255-4627 (Phone)
607-254-4590 (Fax)

HOME PAGE: http://courses.cit.cornell.edu/wbb1/

Fudan University - Fanhai International School of Finance and China Institute of Economics and Finance ( email )

China

Haoyu Gao

Central University of Finance and Economics (CUFE) ( email )

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Xiaoguang Yang

Chinese Academy of Sciences (CAS) ( email )

52 Sanlihe Rd.
Datun Road, Anwai
Beijing, Xicheng District 100864
China

Lin Zhao

Chinese Academy of Sciences (CAS) - Academy of Mathematics and Systems Science ( email )

Beijing
China

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