If You Try, You’ll Get By: Chinese Private Firms’ Efficiency Gains from Overcoming Financial Constraints

Authors

Galina Hale

Cheryl Long

Download PDF
(182 KB)

2010-21 | January 1, 2011

In this paper we demonstrate that private firms in China have more difficult access to external finance than state owned firms and argue that they make adjustments to reduce their demand for external funds. In particular, we show that private firms have lower levels of inventory and trade credit and that these levels decrease with the difficulty of obtaining external finance. Nevertheless, we find no evidence that these lower levels of inventory and trade credit lead to lower productivity or profitability.

About the Authors