China’s Anti-Corruption Campaign and Credit Reallocation from SOEs to Non-SOEs

55 Pages Posted: 1 Feb 2017 Last revised: 12 Mar 2021

See all articles by Bo Li

Bo Li

Tsinghua University - PBC School of Finance

Zhengwei Wang

Tsinghua University - PBC School of Finance

Hao Zhou

Tsinghua University - PBC School of Finance

Date Written: March 12, 2021

Abstract

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

Suggested Citation

Li, Bo and Wang, Zhengwei and Zhou, Hao, China’s Anti-Corruption Campaign and Credit Reallocation from SOEs to Non-SOEs (March 12, 2021). PBCSF-NIFR Research Paper No. 17-01, Available at SSRN: https://ssrn.com/abstract=2908658 or http://dx.doi.org/10.2139/ssrn.2908658

Bo Li (Contact Author)

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China
+86 10-627982146 (Phone)

Zhengwei Wang

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China

Hao Zhou

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing, 100083
China
86-10-62790655 (Phone)

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