Leverage and Capital Structure Determinants of Chinese Listed Companies

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Main author: Ferrarini, Benno
Other authors: Hinojales, Marthe
Scaramozzino, Pasquale
Format: Monographs and Working Papers           
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id eprints-23622
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
topic HA Statistics
HG Finance
description This paper assesses the financial fragility of the Chinese economy by looking at risk factors in the corporate nonfinancial sector. Total debt in the People’s Republic of China has increased significantly in recent years, mostly on account of nonfinancial corporate debt. Earning and the financial performance of corporate firms have weakened, and so has the asset quality of the financial sector. In this paper, quantile regressions are applied to a rich dataset of Chinese listed companies contained in Standard & Poor’s IQ Capital database. We find higher sensitivity over time of corporate leverage to some of its key determinants, particularly for firms at the upper margin of the distribution. In particular, profitability increasingly acts as a curb on corporate leverage. At a time of falling profitability across the Chinese nonfinancial corporate sector, this eases the brake on leverage and may contribute to its continuing increase.
format Monographs and Working Papers
author Ferrarini, Benno
author_facet Ferrarini, Benno
Hinojales, Marthe
Scaramozzino, Pasquale
authorStr Ferrarini, Benno
author_letter Ferrarini, Benno
author2 Hinojales, Marthe
Scaramozzino, Pasquale
author2Str Hinojales, Marthe
Scaramozzino, Pasquale
title Leverage and Capital Structure Determinants of Chinese Listed Companies
publisher Asian Development Bank Economics Working Paper Series no.509
publishDate 2017
url https://eprints.soas.ac.uk/23622/

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