@article{6b667fdda2484502ba4773e46ecd8d10,
title = "Credit Allocation under Economic Stimulus: Evidence from China",
abstract = "We study credit allocation across firms and its real effects during China's economic stimulus plan of 2009-2010. We match confidential loan-level data from the nineteen largest Chinese banks with firm-level data on manufacturing firms. We document that the stimulus-driven credit expansion disproportionately favored state-owned firms and firms with a lower average product of capital, reversing the process of capital reallocation toward private firms that characterized China's high growth before 2008. We argue that implicit government guarantees for state-connected firms become more prominent during recessions and can explain this reversal. Received August 23, 2017; editorial decision November 15, 2018 by Editor Philip Strahan.",
author = "Cong, {Lin William} and Haoyu Gao and Jacopo Ponticelli and Xiaoguang Yang",
note = "Funding Information: We would like to thank Philip Strahan (the editor) and two anonymous referees for their comments and suggestions. We would also like to thank Michael Song, Hui Chen, Darrell Duffie, Nicola Gennaioli, Simon Gilchrist, Kinda Hachem, Zhiguo He, Chang-Tai Hsieh, Anil Kashyap, Jaeyoon Lee, Stefano Rossi, Jinfei Sheng, Kelly Shue, Janis Skrastins, Hao Wang, John Wilson, Arlene Wong, Bernard Yeung, Xiaoyun Yu, Tao Zha, Hao Zhou, and conference and seminar participants at NBER Macro, Money and Financial Frictions, NBER China Workshop, WFA, CICF, AsianFA, CFRC, Texas Finance Festival, Chicago Booth, Northwestern Kellogg, HBS, University of Notre Dame, LSE, EFMA, EIEF, HKU, University of Bristol, Purdue, SAIF, SAEe, and NYU Stern for comments and suggestions. We gratefully acknowledge financial support from the Fama-Miller Center, the IGM center, the Polsky Center, and the Cohen and Keenoy Faculty Research Fund at the University of Chicago, and research grants from the National Science Foundation of China (NSFC 71532013 and 71702207). Tao Chen, Yiran Fan, Gavin Feng, Harry Li, Yijun Liu, Jiaqi Zhang, Xiao Zhang, and Jingtao Zheng provided excellent research assistance. Send correspondence to Jacopo Ponticelli, Kellogg School of Management at Northwestern University, Global Hub Room 4485, 2211 Campus Drive, Evanston, IL 60208; phone: (847) 467-4623. E-mail: jacopo.ponticelli@kellogg.northwestern.edu. Publisher Copyright: {\textcopyright} 2019 The Author(s) 2019. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.",
year = "2019",
month = apr,
day = "1",
doi = "10.1093/rfs/hhz008",
language = "English (US)",
volume = "124",
pages = "3412--3460",
journal = "American Historical Review",
issn = "0002-8762",
publisher = "University of Chicago Press",
number = "2",
}