FDI and credit constraints: Firm-level evidence from China

Economic Systems

Volumn 33, Issue 1, 2009, Pages 1-21

  Héricourt, Jérôme ^a   Poncet, Sandra ^b  

^a UNIV LILLE   (France)

^b UNIVERSITÉ PARIS 1 PANTHÉON SORBONNE   (France)

Author keywords

China; Corporate finance; Financial constraint; Foreign Direct Investment

Indexed keywords

EID: 59449109252     PISSN: 09393625     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.ecosys.2008.07.001     Document Type: Article

References (64)

1. Allayannis Y., and Muzomdar A. The impact of negative cash-flows and influential observations on investment-cash flow sensitivity estimates. Journal of Banking and Finance 28 (2004) 901-930
2. Allen F., Qian J., and Qian M. Law, finance, and economic growth in China. Journal of Financial Economics 77 (2005) 57-116
3. Alti A. How sensitive is investment to cash flow when financing is frictionless. Journal of Finance 58 (2003) 707-722
4. Audretsch D., and Elston J.A. Does firm size matter? Evidence on the impacts of liquidity constraints on firm investment sensitivity behaviour in Germany. International Journal of Industrial Organization 20 (2002) 1-17
5. Bai C.-E., Hsieh C.-T., and Quian Y. The return to capital in China. Brookings Papers on Economic Activity 32 (2006) 61-102
6. Beck T., Levine R., and Loayza N. Finance and the sources of growth. Journal of Financial Economics 58 (2000) 261-300
7. Beck T., Demirguc-Kunt A., and Maksimovic V. Financial and legal constraints to firm growth: does size matter?. The Journal of Finance 60 (2005) 137-177
8. Bigsten, A., Collier, P., Dercon, S., Fafchamps, M., Gauthier, B., Gunning, J.W., Soderbom, M., Oduro, A., Oostendorp, R., Patillo, C., Teal, F., Zeufack, A., 2000. Credit constraints in manufacturing enterprises in Africa. Centre for the Study of African Economies Working Paper Series 134.
9. Blundell R., Bond S.R., and Meghir C. Econometric models of company investment. In: Matyas L., and Sevestre P. (Eds). The Econometrics of Panel Data: A Handbook of the Theory with Applications. Advanced Studies in Theoretical and Applied Econometrics vol. 33 (1996), Kluwer Academic Publishers, Dordrecht 685-710
10. Bond S.R., and Meghir C. Dynamic investment models and the firm's financial policy. Review of Economic Studies 61 (1994) 197-222
11. Bond S., Elston J., Mairesse J., and Mulkay B. Financial factors and investment in Belgium, France, Germany, and the UK: a comparison using company panel data. The Review of Economics and Statistics 85 (2003) 153-165
12. Bond, S.R., Cummins, J.G., 2001. Noisy share prices and the Q model of investment. The Institute for Fiscal Studies Working Paper W01/22, London.
13. Boyreau-Debray, G., Wei, S.-J., 2005. Pitfalls of a state-dominated financial system: the case of China. NBER Working Paper 11214, Cambridge, MA.
14. Calomiris C., and Hubbard G. Internal finance and firm-level investment: evidence from the undistributed profit tax of 1936-1937. Journal of Business 68 (1995) 443-482
15. Caprio G., and Honohan P. Finance for growth: policy choices in a volatile world. A World Bank Policy Research Report (2001), Oxford University Press, Oxford, and World Bank, Washington, DC
16. Claessens S., and Tzioumis K. Measuring Firms' Access to Finance (2006), Mimeo, World Bank, Washington, DC
17. Cleary S. The relationship between firm investment and financial status. Journal of Finance 61 (1999) 197-222
18. Chirinko, R., von Kalckreuth, U., 2003. Further evidence on the relationship between firm investment and financial status. Emory University Department of Economics Working paper 03-02, Atlanta, GA.
19. Devereux M., and Schiantarelli F. Investment, financial factors, and cash flow: Evidence from UK panel data. In: Hubbard R. (Ed). Asymmetric Information, Corporate Finance, and Investment (1990), University of Chicago Press, Chicago 279-306
20. Dollar, D., Wei, S.-J., 2007. Das (wasted) kapital: firm ownership and investment efficiency in China. IMF Working Paper 07/09, Washington, DC.
21. Erikson T., and Whited T. Measurement error and the relationship between investment and Q. Journal of Political Economy 108 (2000) 1027-1057
22. Farrell D., and Lund S. Putting China's capital to work. Far Eastern Economic Review 169 (2006) 5-10
23. Fazzari S., Hubbard G., and Petersen B. Financing constraints and corporate investment. Brookings Papers on Economic Activity 1 (1988) 141-195
24. Fazzari S., Hubbard G., and Petersen B. Investment-cash flow sensitivities are useful: a comment on Kaplan and Zingales. Quarterly Journal of Economics 115 (2000) 695-706
25. Froot K.A. Consistent covariance matrix estimation with cross-sectional dependence and heteroskedasticity in financial data. Journal of Financial and Quantitative Analysis 24 (1989) 333-355
26. Gelos, G., Werner, A., 1999. Financial liberalization, credit constraints, and collateral: investment in the Mexican manufacturing sector. IMF Working Paper WP/99/25, Washington, DC.
27. Gilchrist S., and Himmelberg C. Investment. In: Bernanke B., and Rotemberg J. (Eds). Fundamentals and Finance, NBER macro Annual (1998), MIT Press, Cambridge 223-274
28. Gomes J.F. Financing investment. American Economic Review 91 (2001) 1263-1285
29. Griliches Z., and Hausman J. Errors in variables in panel data. Journal of Econometrics 31 (1986) 93-118
30. Guariglia A., and Poncet S. Could financial distortions be no impediment to economic growth after all? Evidence from China. Journal of Comparative Economics 36 (2008) 633-657
31. Hallward-Driemeier, M., Wallsten, S., Xu, L.C., 2003. The investment climate and the firm: firm-level evidence from China. World Bank Policy Research Working Paper 3003, Washington, DC.
32. Harris J.R., Schiantarelli F., and Siregar M.G. The effect of financial liberalization on the capital structure and investment decisions of Indonesian manufacturing establishments. The World Bank Economic Review 8 (1994) 17-47
33. Harrison A., McMillan M., and Love I. Global capital flows and financing constraints. Journal of Development Economics 75 (2004) 269-301
34. Harrison A., and McMillan M. Does direct foreign investment affect domestic firm credit constraints?. Journal of International Economics 61 (2003) 73-100
35. Harvard Institute for International Development and World Economic Forum. The Africa Competitiveness Report 1998 (1998), World Economic Forum, Geneva
36. Havrylchyk O., and Poncet S. Foreign Direct Investment in China: reward or remedy?. The World Economy 30 (2007) 1662-1681
37. Hayashi F. Tobin's marginal q and average q: a neoclassical interpretation. Econometrica 50 (1982) 213-224
38. Hoshi T., Kashyap A., and Scharfstein D. Corporate structure and investment: evidence from Japanese panel data. Quarterly Journal of Economics 106 (1991) 33-60
39. Huang Y. Selling China: Foreign Direct Investment During the Reform Era (2003), Cambridge University Press, New York
40. Hubbard G. Capital market imperfections and investment. Journal of Economic Literature 36 (1998) 193-225
41. Hubbard G., and Kashyap A. Internal net worth and the investment process: an application to U.S. agriculture. Journal of Political Economy 100 (1992) 506-534
42. Hubbard G., Kashyap A., and Whited T. Internal finance and firm investment. Journal of Money Credit and Banking 27 (1995) 683-701
43. Jaramillo F., Schianterelli F., and Weiss A. Capital market imperfections before and after financial liberalization: an Euler equation approach to panel data for Ecuadorian firms. Journal of Development Economics 51 (1996) 367-386
44. Kaplan S., and Zingales L. Do investment-cash flow sensitivities provide useful measures of financing constraints?. Quarterly Journal of Economics 112 (1997) 169-215
45. Love, I., 2000. Financial Development and Financing Constraints: International Evidence from the Structural Investment Model. PhD Dissertation, Columbia Business School.
46. Love I. Financial development and financing constraints: International evidence from the structural investment model. Review of Financial Studies 16 (2003) 135-161
47. Modigliani F., and Miller M.H. The cost of capital, corporation finance and the theory of investment. American Economic Review 48 (1958) 261-297
48. Moulton B. Random group effects and the precision of regression estimates. Journal of Econometrics 32 (1986) 385-397
49. Moulton B. An illustration of a pitfall in estimating the effects of aggregate variables on micro units. The Review of Economics and Statistics 72 (1990) 334-338
50. Moyen, N., 2002. Investment-cash flow sensitivities: constrained vs. unconstrained firms. Working Paper, University of Colorado, Boulder, CO.
51. Pagan A. Model evaluation by variable addition. In: Hendry D.F., and Wallis K.F. (Eds). Econometrics and Quantitative Economics (1984), Blackwell, Oxford 103-134
52. Park A., and Sehrt K. Tests of financial intermediation and banking reforms in China. Journal of Comparative Economics 29 (2001) 608-644
53. Patillo C. Risk, financial constraints and equipment investment in Ghana: a firm-level analysis. In: Collier P., and Patillo C. (Eds). Investment and Risk in Africa (2000), St. Martin's Press and MacMillan, New York, Basingstoke and London 96-119
54. Petersen M., and Rajan R. The benefits of lending relationships: Evidence from small business data. Journal of Finance 49 (1994) 3-37
55. Prasad, E., Wei, S.-J., 2005. The Chinese approach to capital inflows: patterns and possible explanations. IMF Working Paper 79, Washington, DC.
56. Qian Y., and Roland G. Federalism and the soft budget constraint. American Economic Review 88 (1998) 1143-1162
57. Schiantarelli F. Financial constraints and investment: methodological issues and international evidence. Oxford Review of Economic Policy 12 (1996) 70-89
58. Schiantarelli F. Financial constraints and investment: a critical review of methodological issues and international evidence. In: Peek J., and Rosengren E. (Eds). Is Bank Lending Important for the Transmission of Monetary Policy? Conference Series 39, Federal Reserve Bank of Boston. Boston, MA (1995) 177-214
59. Staiger D., and Stock J.H. Instrumental variables regression with weak instruments. Econometrica 65 (1997) 557-586
60. Stock, J. H., Yogo, M., 2002. Testing for weak instruments in linear IV regression. NBER Technical Working Paper 284, Cambridge, MA.
61. Tobin J. A general equilibrium approach to monetary theory. Journal of Money Credit and Banking 1 (1969) 15-29
62. Verbeek M. A Guide to Modern Econometrics. 2nd edition (2004), John Wiley and Sons, London
63. Whited T. Debt, liquidity constraints, and corporate investment: evidence from panel data. Journal of Finance 47 (1992) 1425-1460
64. World Bank, 2003. World Bank Investment Climate Survey, 2003. The World Bank, Washington, DC. Available at: http://www.enterprisesurveys.org/rawdata.aspx.