Does Joint Credit Granting inhibit corporate zombification? Evidence from China

Joint credit system and corporate green innovation: Evidence from a quasi-natural experiment on implementing the Administration of Joint Credit

PurposeThis study investigates the impact of board funds, banking credit, and economic development on food production in the context of South Asian economies (India, Pakistan, Bangladesh, Sri Lanka, and Nepal).Design/methodology/approachThis study used data from the World Development Indicators covering the years 1991–2019. To investigate the relationship between the variables of the study, we employed the panel unit root test, panel cointegration test, cross-sectional dependence test, fully modified least squares (FMOLS), and panel dynamic least squares (DOLS) estimators.FindingsThe empirical results indicate that board funding significantly increase food production; however, banking credit had a negative impact. Furthermore, the findings indicate that economic development, Arable land, fertilizer consumption, and agricultural employment play a leading role in enhancing food production. The results of the Dumitrescu-Hurlin causality test also show substantiated the significance of the causal relationship among all variables.Practical implicationsSouth Asian countries should prioritize board funding, bank credit, and economic development in their long-term strategies. Ensuring financial access for farmers through micro-credit and public bank initiatives can spur agricultural productivity and economic growth.Originality/valueThis study is the first to combine board funding, banking credit, and economic development to better comprehend their potential impact on food production. Instead of using traditional approaches, this study focuses on these financial and developmental aspects as critical determinants for increasing food production, using evidence from South Asia.

Despite the growing literatures that examined the relationship between financial developments and growth of any economy, there is scarceness in the empirical studies that examine the influence of bank credit on economic performance or growth at secrotal level of any country. Therefore this study came to examine the relationship between bank credit and economic growth in Jordan at different sectors for the period that span from 1993 to 2014. We employ two different methodologies Vector Error Correction Model (VECM) and Granger Causality Test, The results report for a long run relationship could be inferred between Real GDP, and its Explanatory variables of Total Bank Credit (TBC); Bank Credit for Agriculture sector (CFA); Bank Credit for Industry sector (CFI); Bank Credit for Construction sector (CFC); Bank Credit for Tourism sector(CFT). So we can suggest that TBC, CFA, CFI, CFC, and CFT are in the long term relationship with the development of Jordanian economy.Granger causality test conclude for a causal relationship going from economic growth to bank credit at agriculture and construction sectors in Jordan economy. Also the results report bidirectional causality observed among economic development and bank credit to construction sector that is the most important sectors in this economy. Moreover, our results point out that the efficiency of the bank credit facilities in a major economic sectors has an important role in the Jordanian economic growth, and shows the needs to enhance the role of financial sector for different economic sectors by adopting more appropriate macroeconomic policies.

Does digital financial inclusion lead to regional differences in trade credit financing?: A quasi-natural experiment

All This paper mainly aimed to examine the role of Libyan Bank Commerce and Development in financing economic development through bank lending. In addition, a study is being conducted to identifying the extent of the interrelationship between bank credit and economic development. The major challenges encountered by the bank under study when developing plans and policies to contribute to the development process should also be identified and noted. The supervisory financial regulatory authorities in United States of America rely on the CAMELS rating system, which was developed in 1996 to assess the financial condition of a bank and identify its strengths and weaknesses based on its performance in five areas. A descriptive and quantitative analytical approach was used for the study by developing a standard model to determine the impact of bank credit affects Libyan gross domestic product. We collected data from the Libyan Bank Commerce and Development by financial ratios of the CAMEL model, bank credit and the Central Bank of Libya by gross domestic product growth. An important finding of the study is that the indicators of the Bank Commerce and Development are weak, which negatively impacts economic development. In this study, E-Views software was used to consider the normal distribution of the sample and to analysis the data. Furthermore, the study revealed that the bank credit of the Bank of Commerce and Development had a statistically significant effect on economic development. As a result, the bank shows a strong economic contribution to the development of economic sectors, especially small and medium enterprises.

This paper empirically examines the impact of the joint credit system of the banking industry on corporate leverage manipulation and its mechanism of action, using the administrative measures for joint credit granted by banking financial institutions released in 2018 as a quasi-natural experiment. The study shows that: (1) the joint credit system of the banking industry can significantly reduce the leverage manipulation of enterprises, particularly the manipulation of off-balance-sheet liabilities. (2) The joint credit system reduces corporate leverage manipulation through multiple channels, such as improving the quality of corporate information disclosure, decreasing financial flexibility, and lowering the scale of corporate impairment loss accruals on business assets. (3) Cross-border capital flows have an asymmetric effect on the governance effect of the joint credit system. Under conditions of cross-border capital outflows, surges in cross-border capital, and cross-border indirect capital flows, the joint credit system demonstrates a more pronounced effect in curbing leverage manipulation. (4) Heterogeneity analysis shows that, the governance effect of leverage manipulation of joint credit system is more obvious in enterprises with low capital market financing capacity, high internal control quality, and no bank-enterprise affiliations, as well as in industries characterized by intense competition, weaker bank competition, and a stricter financial regulatory environment. The results of this research provide theoretical guidance and institutional reference for how to effectively prevent corporate credit fraud, improve the quality and efficiency of financial services, and deepen the structural reform of the financial supply side.

Whether capital market liberalization generates spillover effects on bank credit decisions is an important and intriguing topic. This paper uses the “Mainland-Hong Kong Stock Connect” as a quasi-natural experiment, with A-share listed companies from 2013 to 2022 as samples, to construct a multi-period difference-in-differences (DID) model, studying the impact of capital market liberalization on bank credit decisions from the perspective of banks. The study finds that, following the implementation of the “Mainland-Hong Kong Stock Connect” trading system, banks have reduced loan interest rates and relaxed collateral requirements. Heterogeneity analysis indicates that the impact of capital market liberalization on bank credit decisions is mainly evident in non-state-owned enterprises, firms operating in poorer institutional environments, and firms facing higher product market competition. Mediation mechanism tests reveal that enhancing corporate information transparency and reducing credit risk are two crucial pathways through which capital market liberalization influences bank credit decisions. Theoretically, the research not only enriches the literature on the economic effects of capital market liberalization but also contributes to the literature on factors influencing bank credit decisions. Practically, the research findings not only offer new insights for optimizing the allocation of bank credit resources but also provide important inspiration for the Chinese government’s continued implementation of strategies for opening up the capital market.

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Digital supply chain management (DSCM) has emerged as a critical driver of enterprise performance in the modern economy, yet empirical evidence on its causal impact on productivity remains limited. This study examines how DSCM adoption affects total factor productivity (TFP) by leveraging China’s supply chain innovation pilot program as a quasi-natural experiment. Using a difference-in-differences approach with propensity score matching, the analysis employs a comprehensive dataset of 2843 Chinese A-share listed companies from 2013 to 2022; the analysis reveals that DSCM adoption leads to an average TFP increase of 14.1%. This positive effect strengthens over time, demonstrating a clear dynamic of organizational learning. Mediation analysis indicates that this productivity enhancement operates through two primary channels: innovation capability enhancement (accounting for approximately 35% of the total effect) and cost efficiency improvement (21%). Crucially, heterogeneity analysis reveals that the positive effects of DSCM are significantly more pronounced in supply-chain-intensive industries, such as manufacturing, and for firms with higher R&D intensity. The findings provide robust causal evidence on the productivity effects of DSCM, offering valuable insights into its underlying mechanisms and key boundary conditions for both enterprise strategy and digital transformation policy.

Utilizing China’s 2021 Measures for the Performance Evaluation of Commercial Banks (MPECB) as a quasi-natural experiment, this study employs a difference-in-differences (DID) approach to examine how bank performance evaluation reforms affect corporate financialization. Results show the revised evaluation system significantly curtails financialization among firms with higher bank loan dependence. The mechanism analysis reveals two primary channels: the alleviation of corporate financing constraints and the narrowing of return differentials between financial and real-sector investments. Further evidence shows that the reform exerts a stronger effect on firms without established bank – firm relationships and also curbs excessive financialization beyond firms’ normal operational needs.

Environmental regulation is a crucial mechanism for attaining both environmental preservation and sustainable development. So, how does the changes in regulatory costs affect the development of green economy? We use Difference-in-Differences model to test the impact of environmental tax implementation on the level of green economy in 30 provinces, municipalities, and autonomous regions of China from 2011 to 2020.Our research find that the implementation of environmental protection tax effectively improve the level of green economy in the areas where the tax burden was raised, that is, the increase in the cost of environmental regulation would promote the growth of the level of green economy. Through a series of robustness tests such as outlier test, placebo test, reduced sample test, lagging independent variable, and control variable, the conclusions of this paper are still robust. Further analysis reveals that the implementation of environmental protection taxes has significantly improved the level of green innovation, industrial structure, and energy use efficiency in tax bearing areas. Heterogeneity analysis find that the impact of environmental protection tax implementation on regional green economy mainly occurs in the tax burden increase areas in the central and western regions. In places characterized by elevated levels of green credit and tax burden, the introduction of environmental protection levies exhibits a more pronounced impact on fostering green economic growth. Hence, it is recommended to further augment environmental rules, broaden the ambit of environmental tax collection, and strengthen regional green credit support in order to facilitate the advancement of the green economy towards high-quality development.

The importance of bank credit to financing economic activity and development has been the subject of empirical analysis for decades. This paper contributes to the debate by evaluating the effect of bank credit on economic activity using a developing economy data. The study period ranged from January 2007 to December 2017. Estimates from descriptive statistics show that the economic activity and bank credit series are negatively skewed and peaked, with non-normal distribution. The results generated for the Augmented Dickey unit root test showed that at the level form, all the variables are non-stationary but after first differencing the variables became stationary and integrated of order one (i.e. I(1)). The results obtained from the multiple regression model show that bank credit has a positive and significant effect on the economic activity. We, therefore, conclude that bank credit has a predictive influence on economic activity. One of the implications of this conclusion is that banking system regulators should formulate policies that enhance access to credit to the private sector while containing inflation.

Purpose This paper aims to investigate the impact of China’s Green Credit Guidelines (GCG) policy on the environmental, social and governance (ESG) scores of restricted enterprises and examine firm’s speculative behavior in response to the policy. Design/methodology/approach This paper views the GCG policy proposed in 2012 as a quasinatural experiment and uses difference-in-differences (DID) model to evaluate its influence on the ESG scores of Chinese nonfinancial A-share listed enterprises from 2007 to 2019. Robustness tests include the propensity score matching (PSM)–DID method and permutation tests. Findings The GCG policy significantly increases the ESG scores of restricted enterprises, particularly enhancing environmental (E) performance. However, it only improves the social (S) and governance (G) performance of firms heavily reliant on bank credit, indicating speculative behavior by enterprises. Increased Government attention, a higher proportion of female executives and more developed local green finance reduce speculative behavior, while executives with financial backgrounds promote it. Practical implications Governments should mandate standardized ESG reporting and monitor restricted enterprises, banks should monitor speculative behavior and firms should integrate ESG into their long-term strategies to support sustainable development. Social implications The results provide evidence of the effectiveness of implementing the GCG policy in China and offer guidance for better promoting green credit policy in developing countries, contributing to the transition toward a more sustainable future. Originality/value To the best of the authors’ knowledge, this paper is the first to explore if the GCG policy’s asymmetric effects on ESG components are due to enterprise speculative behavior and examines the factors influencing this behavior, providing insights for regulators to better implement the GCG policy to promote sustainable development.

We study the impact of higher capital requirements on banks’ balance sheets and their transmission to the real economy. The 2011 EBA capital exercise is an almost ideal quasi-natural experiment to identify this impact with a difference-in-differences matching estimator. We find that treated banks increase their capital ratios by reducing their risk-weighted assets, not by raising their levels of equity, consistent with debt overhang. Banks reduce lending to corporate and retail customers, resulting in lower asset, investment, and sales growth for firms obtaining a larger share of their bank credit from the treated banks. Received November 28, 2016; editorial decision March 9, 2018 by Editor Philip Strahan. Authors have furnished an Internet Appendix, which are available on the Oxford University Press Web site next to the link to the final published paper online.

Bank Response to Higher Capital Requirements: Evidence from a Quasi-Natural Experiment