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Panel Analysis of Chinese Corporate Debt

-- How Far Have Market Mechanisms Penetrated? --

August 2006
Hideto Sakashita*1
Ko Nakayama*2

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In this paper, we investigate the impact of reforms in the banking sector and shifts of the monetary policy focus from quantitative controls to interest-rate controls on bank-lending and corporate-borrowing activities by applying a panel-data analysis of financial data of listed Chinese companies.

Our three main conclusions on corporate borrowing are as follows: 1) quantitative controls on bank lending still remain through such mechanisms as 'window guidance', but their impacts are diminishing; 2) the effect of official lending rates is increasing; and 3) banks are placing more emphasis on financial indicators and corporate conditions when lending money to borrowing companies.

We would like to acknowledge the helpful comments received on this paper from many of the staff members at the Bank of Japan. We would particularly like to thank Mr. Shigeto Nagai for the valuable advice he provided on both the institutional and the analytical aspects. We would also like to acknowledge the constructive comments received on preliminary drafts from Mr. Tomoyuki Fukumoto, Mr. Koichiro Kamata, Mr. Kentaro Morishita, Ms. Kumiko Okazaki, Mr. Shinsuke Oyama and Mr. Wataru Takahashi. We are deeply grateful for all of their assistance. However, any mistakes or inadequacies in this paper are solely the responsibility of the authors. All opinions expressed in this paper are the personal views of the authors and do not necessarily reflect the official views of the Bank of Japan.

  • *1 Bank of Japan, currently Beijing Language and Culture University
  • *2 Bank of Japan, International Department


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