ABSTRACT
Using 1944 matched transaction level data over the period 2003 to 2015, we examined the determinants of choice between bank loans, affiliated loans and non-affiliated loans by listed firms in China. Our results show that firms engaged with affiliated loans or non-affiliated loans, which belong to the shadow-banking system, are more likely to pay a higher interest rate and have a shorter loan maturity when compared with a bank loan. In addition, large firms and firms with low liquidity have a higher likelihood of establishing an affiliated loan and non-affiliated loan relationship. Moreover, compared with bank loans, affiliated loans and non-affiliated loans tend to flow to the electricity, gas and water supply industries, which are very limited entry industries that are dominated by state-owned firms.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 It includes 1041 bank loans, 184 non-affiliate entrust loans and 719 affiliate entrust loans.
2 The test results are available upon request.