Who Bears Risk in China's Non-financial Enterprise Debt?

68 Pages Posted: 11 Sep 2020

See all articles by Ronald W. Anderson

Ronald W. Anderson

London School of Economics & Political Science - Department of Finance; Centre for Economic Policy Research (CEPR); Sun Yat-Sen University (SYSU) - Xinhua College

Multiple version iconThere are 2 versions of this paper

Date Written: July 30, 2020

Abstract

This paper analyses of how risk is allocated in China's markets for debt issued by non-financial enterprises. Compared to other major corporate bond markets China's is unusual in that unlisted, state-owned enterprises account for a large fraction of the debt issued and that the foundations of the corporate and bankruptcy law are young and still evolving. The implications of these features are described and quantified. The results show that the major changes in relative pricing across different market segments cannot be explained well by standard measures of solvency and liquidity. Rather, the most successful explanation is that major policy actions have had the effect of withdrawing implicit guarantees from private issuers and making more explicit the limits of guarantees afforded to state issuers.

Keywords: corporate bonds, Chinese securities markets, implicit guarantees, state capitalism, bankruptcy reform

JEL Classification: G3, H2, K4, P2

Suggested Citation

Anderson, Ronald W., Who Bears Risk in China's Non-financial Enterprise Debt? (July 30, 2020). Available at SSRN: https://ssrn.com/abstract=3665573 or http://dx.doi.org/10.2139/ssrn.3665573

Ronald W. Anderson (Contact Author)

London School of Economics & Political Science - Department of Finance ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6204 (Phone)
+44 20 7955 7420 (Fax)

HOME PAGE: http://personal.lse.ac.uk/ANDERSOR/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Sun Yat-Sen University (SYSU) - Xinhua College ( email )

China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
20
Abstract Views
151
PlumX Metrics