An Attempt to Profile the Finances of China's Enterprise Sector
23 Pages Posted: 1 Feb 2006
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: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Dancing with Wolves: Regulation and Deregulation of Foreign Investment in China's Stock Market
By Jiangyu Wang
-
Access to Capital in China: Competitive Conditions for Foreign and Domestic Firms
-
Banking Reforms in India: Problems and Prospects
By Neha Seth