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.
Original language | English (US) |
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Pages (from-to) | 3412-3460 |
Number of pages | 49 |
Journal | American Historical Review |
Volume | 124 |
Issue number | 2 |
DOIs | |
State | Published - Apr 1 2019 |
ASJC Scopus subject areas
- History
- Archaeology
- Museology