China’s Anti-Corruption Campaign and Credit Reallocation from SOEs to Non-SOEs
55 Pages Posted: 1 Feb 2017 Last revised: 12 Mar 2021
Date Written: March 12, 2021
We provide a novel empirical finding that the public disclosures during China’s recent anti-corruption investigations lead to bank credit reallocation—from less productive state-owned enterprises (SOEs) to more productive non-SOEs. This effect remains significant for extensive margins, concentrates on cases of central government officials, and is stronger for industries with more previous investigations. Our finding is consistent with a supply-side channel interpretation, corroborated by an exogenous shock to the banking sector. Stock market reaction and firm investment response are also positive. However, the previous anti-corruption campaign is muted on such a credit reallocation effect.
Keywords: Anti-corruption, credit allocation, state ownership, public disclosure
JEL Classification: G30, G32, G34, P26
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