Do State-Owned Enterprises Add More Value from Banking Relationship Than Private-Owned Enterprises?The Case of China

• Main Authors: Van-Hoa Nguyen, 阮文和
• Other Authors: Hai Chin Yu
• Format: Others
• Language: en_US
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/35536742873578203432

博士 === 中原大學 === 商學博士學位學程 === 101 === Establishing a banking relationship is a common practice in credit financing across the world, especially in China. This has been assumed to be particularly beneficial for both state-owned enterprises (SOEs) and privately owned enterprises (POEs). The bank is the main supplier of credit to these firms. However, studies of the value of banking relationships in comparative financial systems are scarce. Therefore, our research focuses on whether banking relationships add more value to SOEs than they do for POEs in the Chinese context. This paper describes the theoretical role of lending relationships in financial markets. Over recent years, lending relationships have lost ground because of a change in banks’ business models, which can ultimately lead to a worsening of the business environment for POEs and SOEs. To extend the theory, this study examines whether firms add value to the banking relationship. As evidence, we use financial and accounting data relating to SOEs and POEs in China between 1999–2008. After controlling for corporate characteristics, we find that Chinese SOEs do not add more value to the banking relationships than POEs do and that there is a negative relationship between banking relationships and firm value for both SOEs and POEs. Also, after share privatization in 2005, firm value significantly increased after controlling for banking relationships for both SOEs and POEs. The results of this study thus have some implications for policy makers.