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Provincial official turnover and bank loans

Research output: Contribution to journalArticle

Original languageEnglish
Article number101202
JournalPacific-Basin Finance Journal
Volume57
Early online date27 Aug 2019
DOIs
Publication statusPublished - Oct 2019

Abstract

Based on the turnover data of provincial party committee secretaries in China between 2000 and 2008, we find that the loan increment of local SOEs (state-owned enterprises) decreases by 18.9% in turnover years. We also document increased efficiency of long-term loans in turnover years. The effects of provincial leader turnover on bank loans only exist for local SOEs in eastern regions. Local officials have less of a political incentive to exert influence on bank credit allocation in turnover years, and therefore banks act as more effective intermediaries in optimizing credit allocation and improving the efficiency of loans.

    Research areas

  • political turnover, bank loans, credit allocation efficiency, local SOEs

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