Formal Versus Informal Finance : Evidence from China

The fast growth of Chinese private sector firms is taken as evidence that informal finance can facilitate firm growth better than formal banks in developing countries. We examine firm financing patterns and growth using a database of twenty-four hundred Chinese firms. While a relatively small percen...

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Main Authors:	Ayyagari, Meghana, Demirguc-Kunt, Asli, Maksimovic, Vojislav
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financing Policy Financial Risk and Risk Management Capital and Ownership Structure G320 Firm Performance: Size, Diversification, and Scope L250 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Institutions and Their Transitions: Financial Economics P340
Online Access:	http://hdl.handle.net/10986/4818

id	okr-10986-4818
recordtype	oai_dc
spelling	okr-10986-48182021-04-23T14:02:19Z Formal Versus Informal Finance : Evidence from China Ayyagari, Meghana Demirguc-Kunt, Asli Maksimovic, Vojislav Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financing Policy Financial Risk and Risk Management Capital and Ownership Structure G320 Firm Performance: Size, Diversification, and Scope L250 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Institutions and Their Transitions: Financial Economics P340 The fast growth of Chinese private sector firms is taken as evidence that informal finance can facilitate firm growth better than formal banks in developing countries. We examine firm financing patterns and growth using a database of twenty-four hundred Chinese firms. While a relatively small percentage of firms utilize bank loans, bank financing is associated with faster growth whereas informal financing is not. Controlling for selection, we find that firms with bank financing grow faster than similar firms without bank financing and that our results are not driven by bank corruption or the selection of firms that have accessed the formal financial system. Our findings question whether reputation and relationship-based financing are responsible for the performance of the fastest-growing firms in developing countries. 2012-03-30T07:29:53Z 2012-03-30T07:29:53Z 2010 Journal Article Review of Financial Studies 08939454 http://hdl.handle.net/10986/4818 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financing Policy Financial Risk and Risk Management Capital and Ownership Structure G320 Firm Performance: Size, Diversification, and Scope L250 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Institutions and Their Transitions: Financial Economics P340
spellingShingle	Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financing Policy Financial Risk and Risk Management Capital and Ownership Structure G320 Firm Performance: Size, Diversification, and Scope L250 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Institutions and Their Transitions: Financial Economics P340 Ayyagari, Meghana Demirguc-Kunt, Asli Maksimovic, Vojislav Formal Versus Informal Finance : Evidence from China
geographic_facet	China
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	The fast growth of Chinese private sector firms is taken as evidence that informal finance can facilitate firm growth better than formal banks in developing countries. We examine firm financing patterns and growth using a database of twenty-four hundred Chinese firms. While a relatively small percentage of firms utilize bank loans, bank financing is associated with faster growth whereas informal financing is not. Controlling for selection, we find that firms with bank financing grow faster than similar firms without bank financing and that our results are not driven by bank corruption or the selection of firms that have accessed the formal financial system. Our findings question whether reputation and relationship-based financing are responsible for the performance of the fastest-growing firms in developing countries.
format	Journal Article
author	Ayyagari, Meghana Demirguc-Kunt, Asli Maksimovic, Vojislav
author_facet	Ayyagari, Meghana Demirguc-Kunt, Asli Maksimovic, Vojislav
author_sort	Ayyagari, Meghana
title	Formal Versus Informal Finance : Evidence from China
title_short	Formal Versus Informal Finance : Evidence from China
title_full	Formal Versus Informal Finance : Evidence from China
title_fullStr	Formal Versus Informal Finance : Evidence from China
title_full_unstemmed	Formal Versus Informal Finance : Evidence from China
title_sort	formal versus informal finance : evidence from china
publishDate	2012
url	http://hdl.handle.net/10986/4818
_version_	1764392876656033792

Formal Versus Informal Finance : Evidence from China

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