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Essays on Finance, Networks and Institutions

Burzynska, Katarzyna LU (2015) In Lund Economic Studies 182.
Abstract
This thesis consists of four essays discussing network structures and institutions in financial markets. The first essay explores the determinants of the egocentric lending networks of stock listed companies in China. Egocentric lending networks are constructed using the public loan announcements of firms listed on China’s two stock exchanges combined with cross-ownership shares connecting the lending institutions. The study demonstrates that large, high-growth firms and firms with low leverage are more likely to have less-constrained lending networks. In contrast, highly indebted firms with poor performance tend to have more-constrained lending networks. The lending networks of firms with higher shares of state ownership, however, are not... (More)
This thesis consists of four essays discussing network structures and institutions in financial markets. The first essay explores the determinants of the egocentric lending networks of stock listed companies in China. Egocentric lending networks are constructed using the public loan announcements of firms listed on China’s two stock exchanges combined with cross-ownership shares connecting the lending institutions. The study demonstrates that large, high-growth firms and firms with low leverage are more likely to have less-constrained lending networks. In contrast, highly indebted firms with poor performance tend to have more-constrained lending networks. The lending networks of firms with higher shares of state ownership, however, are not significantly related to the standard firm characteristics, suggesting that partly state-owned corporations in China still enjoy privileged access to bank financing, despite substantial reforms and growing competition in China’s banking sector. The second essay studies the relation between firm specific networks of creditors and corporate access to bank loans in China. The results show that firms with highly constrained lending networks have better access to credit than firms with less constrained networks. This effect is most pronounced in regions where formal financial institutions are weak. These findings suggest that highly constrained lending networks play a significant role in mitigating the problem of information asymmetry and adverse selection in China’s credit market. The third essay investigates the relationship between social beliefs and microfinance financial performance. We find that microfinance institutions in countries with higher levels of trust and more collectivist culture have lower operating and default costs and charge lower interest rates. These results provide the first large cross-country evidence that social beliefs are important determinants of microfinance performance. The fourth essay uses a novel data set covering the period 1997 to 2008 and employ Granger causality tests to estimate the finance-growth nexus of each of China's four distinct organizational bank forms. Our results show that state-owned commercial banks and rural credit cooperatives do not Granger-cause GDP growth and that state-owned commercial banks even have a negative effect on manufacturing growth. By contrast, policy banks and joint stock commercial banks promote economic growth. (Less)
Please use this url to cite or link to this publication:
author
supervisor
opponent
  • Professor Morrison, Alan, Saïd Business School, University of Oxford
organization
publishing date
type
Thesis
publication status
published
subject
keywords
Lending networks, Banking, China, Microfinance, Trust, Collectivism, Growth
in
Lund Economic Studies
volume
182
pages
188 pages
defense location
EC3:211
defense date
2015-05-20 10:15
ISSN
0460-0029
language
English
LU publication?
yes
id
33a13e23-b71a-4af8-9bac-ed27c31ea121 (old id 5322701)
date added to LUP
2015-04-28 09:19:13
date last changed
2016-09-19 08:45:01
@phdthesis{33a13e23-b71a-4af8-9bac-ed27c31ea121,
  abstract     = {This thesis consists of four essays discussing network structures and institutions in financial markets. The first essay explores the determinants of the egocentric lending networks of stock listed companies in China. Egocentric lending networks are constructed using the public loan announcements of firms listed on China’s two stock exchanges combined with cross-ownership shares connecting the lending institutions. The study demonstrates that large, high-growth firms and firms with low leverage are more likely to have less-constrained lending networks. In contrast, highly indebted firms with poor performance tend to have more-constrained lending networks. The lending networks of firms with higher shares of state ownership, however, are not significantly related to the standard firm characteristics, suggesting that partly state-owned corporations in China still enjoy privileged access to bank financing, despite substantial reforms and growing competition in China’s banking sector. The second essay studies the relation between firm specific networks of creditors and corporate access to bank loans in China. The results show that firms with highly constrained lending networks have better access to credit than firms with less constrained networks. This effect is most pronounced in regions where formal financial institutions are weak. These findings suggest that highly constrained lending networks play a significant role in mitigating the problem of information asymmetry and adverse selection in China’s credit market. The third essay investigates the relationship between social beliefs and microfinance financial performance. We find that microfinance institutions in countries with higher levels of trust and more collectivist culture have lower operating and default costs and charge lower interest rates. These results provide the first large cross-country evidence that social beliefs are important determinants of microfinance performance. The fourth essay uses a novel data set covering the period 1997 to 2008 and employ Granger causality tests to estimate the finance-growth nexus of each of China's four distinct organizational bank forms. Our results show that state-owned commercial banks and rural credit cooperatives do not Granger-cause GDP growth and that state-owned commercial banks even have a negative effect on manufacturing growth. By contrast, policy banks and joint stock commercial banks promote economic growth.},
  author       = {Burzynska, Katarzyna},
  issn         = {0460-0029},
  keyword      = {Lending networks,Banking,China,Microfinance,Trust,Collectivism,Growth},
  language     = {eng},
  pages        = {188},
  school       = {Lund University},
  series       = {Lund Economic Studies},
  title        = {Essays on Finance, Networks and Institutions},
  volume       = {182},
  year         = {2015},
}