An Attempt to Profile the Finances of China's Enterprise Sector

23 Pages Posted: 1 Feb 2006

See all articles by Cem Karacadag

Cem Karacadag

International Monetary Fund (IMF) - Monetary and Exchange Affairs Department

Paul Heytens

International Monetary Fund (IMF)

Date Written: November 2001

Abstract

This paper examines the leverage, efficiency, and debt-repayment capacity of the Chinese enterprise sector using aggregate and firm level data. The cash coverage of interest expense, in particular, is used as a bridge between enterprise finances and banks' asset quality in order to develop insights on banking soundness. The interest coverage analysis corroborates the high level of nonperforming loans in the financial system. This underscores the urgency of hardening budget constraints on state-owned enterprises and stemming the flow of new bad loans by accelerating ongoing structural reforms.

Keywords: Chinese economy, Chinese corporate sector, Chinese financial sector

JEL Classification: G14, G30

Suggested Citation

Karacadag, Cem and Heytens, Paul, An Attempt to Profile the Finances of China's Enterprise Sector (November 2001). IMF Working Paper No. 01/182, Available at SSRN: https://ssrn.com/abstract=880261

Cem Karacadag (Contact Author)

International Monetary Fund (IMF) - Monetary and Exchange Affairs Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Paul Heytens

International Monetary Fund (IMF)

700 19th Street NW
Washington, DC 20431
United States