S-Space Graduate School of International Studies (국제대학원) Dept. of International Studies (국제학과) Theses (Master's Degree_국제학과)
The Impact of Financial Development on Companies’ Financing Constraints: Evidence from China
금융 발전이 기업의 자본조달 제약에 미치는 영향 분석: 중국을 대상으로
- 국제대학원 국제학과
- Issue Date
- 서울대학교 국제대학원
- 학위논문 (석사)-- 서울대학교 국제대학원 국제학과, 2017. 8. 이영섭.
- Empirical studies show that financial development can stimulate economic growth by relaxing companies’ financing constraints. As a series of financial reforms have been carried out by Chinese government over the past two decades, China’s financial institutions and markets continue to develop. In this paper, I measure the impact of financial development on Chinese companies’ financing constraints by estimating the Euler investment equation using the micro-level panel data for 1052 Chinese manufacturing companies over nine years from 2007 to 2015. The size of financial institutions and stock market and stock market efficiency are indicators of financial development in the model. Financing constraints are measured by the sensitivity of investment to cash flow. In general, the more sensitive one company’s investment is to its cash flow, the more significant financing constraints it is facing. I find that firstly Chinese companies still face financing constraints although China’s financial system keeps developing. In the second place, non-SOEs are more financially constrained than SOEs but they also benefit more from financial development than SOEs. Lastly, financial depth has a large effect on the reduction in financing constraints. The impact of stock market efficiency on financing constraints is different from expectation because stock market turnover ratio is a poor proxy for the efficiency of Chinese stock market.