Year: 2018
Type: report
Abstract: This paper uses firm-level data to document and analyze international bond issuance by Chinese non-financial corporations and the use of the proceeds of issuance.We find that dollar issuance is positively correlated with the differential between domestic and foreign interest rates.This interest rate differential increases the likelihood of dollar bond issuance by risky firms and decreases the likelihood of dollar bond issuance of exporters and profitable firms.Moreover, and most strikingly, we find that risky firms do more inter-firm lending than non-risky firms and that this lending rose significantly after the regulatory shock of 2008-09, when the authorities sought to restrict the financial activities of risky firms.Risky firms try to boost profitability by engaging in speculative activities that mimic the behavior of financial institutions while escaping prudential regulation that limits risk-taking by financial firms.
DOI: 10.3386/w24513
Authors: Yi Huang, Ugo Panizza, Richard Portes
Institutions: Chinese Academy of Social Sciences, International Monetary Fund, National Bureau of Economic Research, Peking University, Swiss National Bank, State Administration of Foreign Exchange, China Institute of Finance and Capital Markets, Bank of England, London Business School, Graduate Institute of International and Development Studies, Tsinghua University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2801992867