Title

Ownership Structure, Lending Bias, and Liquidity Constraints: Evidence from Shanghai's Manufacturing Sector

Document Type

Journal article

Source Publication

Journal of Comparative Economics

Publication Date

6-1998

Volume

26

Issue

2

First Page

301

Last Page

316

Publisher

Elsevier

Abstract

This paper studies the relationship between investment and cash flow in the manufacturing sector of Shanghai in order to examine the existence of lending bias in this sector. Our empirical results confirm that the investment of manufacturing enterprises in Shanghai is sensitive to cash flow and that cash-flow variables play a significant role in determining investment. In addition, private enterprises are significantly more liquidity-constrained than state-owned enterprises in terms of the availability of cash flow while international joint ventures are the least liquidity-constrained in terms of replacement capital. Furthermore, collective-owned enterprises are less liquidity-constrained than state-owned enterprises in terms of the availability of cash flow. This may be due to the inter-firm loans and close relationship between state-owned and collective-owned enterprises.

DOI

10.1006/jcec.1998.1527

Print ISSN

01475967

Publisher Statement

Copyright © 1998 by Academic Press.

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Full-text Version

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Recommended Citation

Chow, C. K. W., & Fung, M. K. Y. (1999). Ownership Structure, Lending Bias, and Liquidity Constraints: Evidence from Shanghai's Manufacturing Sector. Journal of Comparative Economics, 26(2), 301-316. doi:10.1006/jcec.1998.1527