TITLE:
Credit Distortion, Firm Nature and Investment Efficiency
AUTHORS:
Lv Chen
KEYWORDS:
Credit Distortion, Firm Nature, Investment Efficiency, Overinvestment/Underinvestment
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.8 No.4,
April
26,
2018
ABSTRACT: Credit
is the foremost external source of funds for enterprises. The allocation
rationality of credit fund directly affects corporate financing constraints and
further manipulates business investment actions. Based on government intervention,
the credit market in China presents certain degree of allocation distortion,
which means that state-owned companies have quantity and cost advantages over
non state-owned companies in respect of the acquisition of credit resources.
Taking listed A share in 2008-2015 as the samples, the thesis firstly
introduces the interprovincial variables of credit allocation distortion to
quantify external credit allocation distortion degree faced by companies and
study investment inefficiency problems in state-owned companies and non
state-owned companies. As proved by the empirical results: 1)
comparing with state-owned companies, non state-owned companies encounter more
grievous problems in underinvestment and overinvestment; 2) the aggravation of regional credit allocation
distortion degree will significantly intensify overinvestment of state-owned
companies and underinvestment of non state-owned companies in local regions. It
fully indicates that the imbalance of credit resource allocation will encumber
corporate investment efficiency.