Local Crowding Out in China

Ugo Panizza, Marco Pagano and Yi Huang

No 11489, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In China, between 2006 and 2013, local public debt crowded out the investment of private ï¬ rms by tightening their funding constraints, while leaving state-owned ï¬ rms’ investment unaffected. We establish this result using a purpose-built dataset for Chinese local public debt. Private ï¬ rms invest less in cities with more public debt, the reduction in investment being larger for ï¬ rms located farther from banks in other cities or more dependent on external funding. Moreover, in cities where public debt is high, private ï¬ rms’investment is more sensitive to internal cash flow.

Keywords: investment; Local public debt; Crowding out; Credit constraints; China (search for similar items in EconPapers)
JEL-codes: E22 H63 H74 L60 O16 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: Local Crowding‐Out in China (2020)
Working Paper: Local Crowding Out in China (2019)
Working Paper: Local Crowding Out in China (2019)
Working Paper: Local crowding out in China (2019)
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