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What is driving firm's performance in China?

Duevel, Jan LU (2012) EKHR81 20121
Department of Economic History
Abstract
China’s economic development since the beginning of the reform in 1978 has been impressive. Regardless of China’s poor financial banking system and lack of legal enforcements, the growth of Chinese firms makes China’s GDP one of the fastest growing in the world. This paper endeavors to answer the question of formal financial system or its counterpart the alternative informal finance are associated with a faster growth of Chinese firms. I make use of a dataset based on 2’400 firms from Investment Climate Survey of the World Bank 2003. The results illustrate that although the majority of firms make use of informal finance, it cannot be confirmed that the alternative finance is linked to a superior firms’ performance. It is however the formal... (More)
China’s economic development since the beginning of the reform in 1978 has been impressive. Regardless of China’s poor financial banking system and lack of legal enforcements, the growth of Chinese firms makes China’s GDP one of the fastest growing in the world. This paper endeavors to answer the question of formal financial system or its counterpart the alternative informal finance are associated with a faster growth of Chinese firms. I make use of a dataset based on 2’400 firms from Investment Climate Survey of the World Bank 2003. The results illustrate that although the majority of firms make use of informal finance, it cannot be confirmed that the alternative finance is linked to a superior firms’ performance. It is however the formal finance that is associated with a faster firms’ growth. Hence, the outcome of this paper suggests that the finance of firms based on reputation and social network is often overvalued in the literature (Less)
Please use this url to cite or link to this publication:
author
Duevel, Jan LU
supervisor
organization
alternative title
Formal or Informal Finance
course
EKHR81 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Formal finance, informal finance, Bank Finance, Self Finance, firms’ performance, Collateral
language
English
id
3131635
date added to LUP
2012-11-15 14:01:43
date last changed
2012-11-15 14:01:43
@misc{3131635,
  abstract     = {China’s economic development since the beginning of the reform in 1978 has been impressive. Regardless of China’s poor financial banking system and lack of legal enforcements, the growth of Chinese firms makes China’s GDP one of the fastest growing in the world. This paper endeavors to answer the question of formal financial system or its counterpart the alternative informal finance are associated with a faster growth of Chinese firms. I make use of a dataset based on 2’400 firms from Investment Climate Survey of the World Bank 2003. The results illustrate that although the majority of firms make use of informal finance, it cannot be confirmed that the alternative finance is linked to a superior firms’ performance. It is however the formal finance that is associated with a faster firms’ growth. Hence, the outcome of this paper suggests that the finance of firms based on reputation and social network is often overvalued in the literature},
  author       = {Duevel, Jan},
  keyword      = {Formal finance,informal finance,Bank Finance,Self Finance,firms’ performance,Collateral},
  language     = {eng},
  note         = {Student Paper},
  title        = {What is driving firm's performance in China?},
  year         = {2012},
}