“Corporate Default with Chinese Characteristics” by Warren Bailey
Friday, 8 April 2016 | 2:30pm - 4pm
KK1121
Finance Seminar
Author:
Brett Green
UC BerkeleyJing Ai
University of HawaiiHaoyu Gao
Chinese Academy of SciencesXiaoguang Yang
Chinese Academy of SciencesLin Zhao
Chinese Academy of Sciences
We study corporate default and its resolution with all commercial loans over RMB¥ 50 million from the largest 19 Chinese banks from 2006 to 2012. Unsurprisingly, borrowers from government-designated strategic industries or owned by the state default more frequently and perform poorly after default. Big Five state owned banks and poor regional development aggravate such effects. However, we find significant evidence of beneficial relationship banking, in spite of potential soft budget and hold-up problems and the incomplete development of China’s economy. Thus, as China’s economy evolves, some features of its socialist origins persist while other features of modern banking are emerging.
