Publication:
Formal Versus Informal Finance : Evidence from China

Simple item page
dc.contributor.authorAyyagari, Meghana
dc.contributor.authorDemirgüç-Kunt, Asli
dc.contributor.editorMaksimovic, Vojislav
dc.date.accessioned2012-05-25T19:50:20Z
dc.date.available2012-05-25T19:50:20Z
dc.date.issued2008-01
dc.description.abstractChina is often mentioned as a counterexample to the findings in the finance and growth literature since, despite the weaknesses in its banking system, it is one of the fastest growing economies in the world. The fast growth of Chinese private sector firms is taken as evidence that it is alternative financing and governance mechanisms that support China's growth. This paper takes a closer look at firm financing patterns and growth using a database of 2,400 Chinese firms. The authors find that a relatively small percentage of firms in the sample utilize formal bank finance with a much greater reliance on informal sources. However, the results suggest that despite its weaknesses, financing from the formal financial system is associated with faster firm growth, whereas fund raising from alternative channels is not. Using a selection model, the authors find no evidence that these results arise because of the selection of firms that have access to the formal financial system. Although firms report bank corruption, there is no evidence that it significantly affects the allocation of credit or the performance of firms that receive the credit. The findings suggest that the role of reputation and relationship based financing and governance mechanisms in financing the fastest growing firms in China is likely to be overestimated.en
dc.identifierhttp://documents.worldbank.org/curated/en/2008/01/8916707/formal-versus-informal-finance-evidence-china
dc.identifier.doi10.1596/1813-9450-4465
dc.identifier.urihttps://hdl.handle.net/10986/6462
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper; No. 4465
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO BANK LOAN
dc.subjectACCESS TO BANK LOANS
dc.subjectACCESS TO CAPITAL
dc.subjectACCESS TO CREDIT
dc.subjectACCESS TO FINANCE
dc.subjectACCESS TO FORMAL FINANCE
dc.subjectACCOUNTING
dc.subjectADDITIONAL FINANCING
dc.subjectAGRICULTURE BANK
dc.subjectALLOCATION OF CREDIT
dc.subjectALTERNATIVE FINANCING
dc.subjectAPPLICATION PROCEDURES
dc.subjectAVAILABILITY OF FINANCE
dc.subjectAVERAGE GROWTH
dc.subjectBACK-ALLEY BANKING
dc.subjectBALANCE SHEET
dc.subjectBANK ACCESS
dc.subjectBANK COMPETITION
dc.subjectBANK DEPOSITS
dc.subjectBANK FINANCING
dc.subjectBANK FUNDING
dc.subjectBANK LENDING
dc.subjectBANK LOAN
dc.subjectBANK LOANS
dc.subjectBANK OFFICERS
dc.subjectBANK OFFICIALS
dc.subjectBANKING SECTOR
dc.subjectBANKING SYSTEM
dc.subjectBOND
dc.subjectBOND MARKET
dc.subjectBOND MARKETS
dc.subjectBORROWER
dc.subjectBRIBING
dc.subjectBROKERS
dc.subjectBUSINESS ACTIVITY
dc.subjectBUSINESS ANGELS
dc.subjectBUSINESS DEPARTMENT
dc.subjectCAPITAL ACCUMULATION
dc.subjectCAPITAL LOANS
dc.subjectCAPITAL MARKETS
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCAPITAL STRUCTURE
dc.subjectCAPITALIZATION
dc.subjectCASH FLOW
dc.subjectCHECKS
dc.subjectCOLLATERAL
dc.subjectCOLLATERAL REQUIREMENT
dc.subjectCOLLATERAL REQUIREMENTS
dc.subjectCOMMERCIAL BANK
dc.subjectCOMMERCIAL BANKS
dc.subjectCONSUMER
dc.subjectCONTRACTUAL OBLIGATIONS
dc.subjectCONTRIBUTION
dc.subjectCORPORATE BOND
dc.subjectCORPORATE FINANCE
dc.subjectCORRUPTION
dc.subjectCREDIT CARD
dc.subjectCREDIT COOPERATIVES
dc.subjectCREDIT HISTORIES
dc.subjectCREDIT MARKETS
dc.subjectCREDIT RATING
dc.subjectCREDIT RATING AGENCIES
dc.subjectCREDIT RATINGS
dc.subjectDEBT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDIRECTED CREDIT
dc.subjectDIVERSIFICATION
dc.subjectDIVERSIFICATION STRATEGY
dc.subjectEARNINGS
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC GROWTH
dc.subjectECONOMICS
dc.subjectECONOMIES IN TRANSITION
dc.subjectEDUCATION LEVEL
dc.subjectEDUCATIONAL LEVEL
dc.subjectEMERGING MARKETS
dc.subjectEMPLOYEE
dc.subjectEMPLOYMENT
dc.subjectENDOWMENTS
dc.subjectENFORCEMENT MECHANISMS
dc.subjectENTREPRENEURIAL VENTURES
dc.subjectENTREPRENEURS
dc.subjectENTREPRENEURSHIP
dc.subjectEQUITY FINANCE
dc.subjectEQUITY FINANCING
dc.subjectEQUITY MARKETS
dc.subjectEXCLUSION
dc.subjectEXTERNAL FINANCE
dc.subjectEXTERNAL FINANCING
dc.subjectFAMILY MEMBERS
dc.subjectFINANCES
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectFINANCIAL INSTITUTION
dc.subjectFINANCIAL INTERMEDIATION
dc.subjectFINANCIAL LIBERALIZATION
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL PERFORMANCE
dc.subjectFINANCIAL STUDIES
dc.subjectFINANCIAL SYSTEM
dc.subjectFINANCIAL SYSTEMS
dc.subjectFINANCING NEEDS
dc.subjectFINANCING SOURCES
dc.subjectFIXED ASSET
dc.subjectFIXED ASSETS
dc.subjectFOREIGN BANKS
dc.subjectFOREIGN DIRECT INVESTMENT
dc.subjectFOREIGN FIRMS
dc.subjectFOREIGN INVESTMENT
dc.subjectFORMAL BANK
dc.subjectFORMAL BANKING
dc.subjectFORMAL BANKING SYSTEM
dc.subjectFORMAL EDUCATION
dc.subjectFORMAL FINANCIAL INSTITUTIONS
dc.subjectFORMAL FINANCIAL SECTOR
dc.subjectGOOD CREDIT
dc.subjectGOVERNMENT POLICY
dc.subjectGROWTH OPPORTUNITIES
dc.subjectHIGH INTEREST RATES
dc.subjectHOUSEHOLDS
dc.subjectINCOME
dc.subjectINCOME GROUPS
dc.subjectINDICATORS OF ACCESS
dc.subjectINDUSTRIAL ENTERPRISES
dc.subjectINFORMAL BANK
dc.subjectINFORMAL BANKS
dc.subjectINFORMAL CREDIT
dc.subjectINFORMAL FINANCE
dc.subjectINFORMAL FINANCIAL INSTITUTIONS
dc.subjectINFORMAL FINANCING
dc.subjectINFORMAL LENDERS
dc.subjectINFORMATION TECHNOLOGY
dc.subjectINITIAL FUNDING
dc.subjectINSTITUTIONAL DEVELOPMENT
dc.subjectINSTITUTIONAL INVESTORS
dc.subjectINTEREST RATE
dc.subjectINTEREST RATE CEILINGS
dc.subjectINTERNAL FINANCE
dc.subjectINTERNAL FINANCING
dc.subjectINTERNAL FUNDS
dc.subjectINTERNATIONAL BANK
dc.subjectINVESTMENT CLIMATE
dc.subjectINVESTMENT CLIMATES
dc.subjectINVESTMENT CORPORATIONS
dc.subjectINVESTOR PROTECTION
dc.subjectLACK OF COLLATERAL
dc.subjectLARGE COMPANIES
dc.subjectLARGE FIRMS
dc.subjectLAWS
dc.subjectLEGAL PROTECTION
dc.subjectLEGAL PROTECTIONS
dc.subjectLEGAL SYSTEM
dc.subjectLENDER
dc.subjectLIMITED ACCESS
dc.subjectLIMITED ACCESS TO BANK
dc.subjectLINE OF CREDIT
dc.subjectLOAN APPLICATION
dc.subjectLOAN APPLICATIONS
dc.subjectLOAN GUARANTEE
dc.subjectLOAN GUARANTEE PROGRAM
dc.subjectLOAN GUARANTEE PROGRAMS
dc.subjectLOAN OFFICERS
dc.subjectLOAN PORTFOLIOS
dc.subjectLOANS FROM FAMILY
dc.subjectLOCAL BANK
dc.subjectLOW INCOME
dc.subjectMARKET CAPITALIZATION
dc.subjectMARKETING
dc.subjectMEDIUM ENTERPRISES
dc.subjectMINORITY SHAREHOLDERS
dc.subjectMONEY LENDER
dc.subjectMONEYLENDER
dc.subjectMONEYLENDERS
dc.subjectMORAL HAZARD
dc.subjectOVERDRAFT
dc.subjectPOSSESSION
dc.subjectPRIVATE ENTERPRISES
dc.subjectPRIVATE ENTREPRENEURS
dc.subjectPRIVATE PROPERTY
dc.subjectPRIVATIZATION
dc.subjectPROBABILITIES
dc.subjectPROBABILITY
dc.subjectPRODUCTIVITY
dc.subjectPROFITABILITY
dc.subjectPROPERTY RIGHTS
dc.subjectPUBLIC POLICY
dc.subjectQUESTIONNAIRE
dc.subjectREAL ESTATE
dc.subjectREGRESSION ANALYSIS
dc.subjectREINVESTMENT
dc.subjectREINVESTMENT RATES
dc.subjectREPAYMENT
dc.subjectREPAYMENT CAPACITY
dc.subjectRETAINED EARNINGS
dc.subjectRETURNS
dc.subjectRURAL CREDIT
dc.subjectSALE
dc.subjectSALES
dc.subjectSALES GROWTH
dc.subjectSECONDARY SCHOOL
dc.subjectSELF-FINANCING
dc.subjectSMALL BORROWERS
dc.subjectSMALL BUSINESS
dc.subjectSMALL BUSINESS FINANCE
dc.subjectSMALL BUSINESS LENDING
dc.subjectSMALL ENTERPRISES
dc.subjectSMALL FIRM FINANCE
dc.subjectSOCIAL CAPITAL
dc.subjectSOCIAL WELFARE
dc.subjectSOURCES OF FUND
dc.subjectSTART-UPS
dc.subjectSTATE BANKS
dc.subjectSTATE OWNED BANKS
dc.subjectSTOCK MARKET
dc.subjectSTOCK MARKETS
dc.subjectTRADE CREDIT
dc.subjectTRANSITION ECONOMIES
dc.subjectWAGES
dc.subjectWORKING CAPITAL
dc.titleFormal Versus Informal Finance : Evidence from Chinaen
dspace.entity.typePublication
okr.crossref.titleFormal Versus Informal Finance : Evidence From China
okr.date.doiregistration2025-04-10T10:29:06.308268Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2008/01/8916707/formal-versus-informal-finance-evidence-china
okr.globalpracticeFinance and Markets
okr.guid394821468240019686
okr.identifier.doi10.1596/1813-9450-4465
okr.identifier.externaldocumentum000158349_20080103141641
okr.identifier.internaldocumentum8916707
okr.identifier.reportWPS4465
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/01/03/000158349_20080103141641/Rendered/PDF/wps4465.pdfen
okr.region.administrativeEast Asia and Pacific
okr.region.countryChina
okr.topicBanks and Banking Reform
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicFinance and Financial Sector Development::Bankruptcy and Resolution of Financial Distress
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublication234a20c0-893c-561a-8c90-6f5be5be5b9b
relation.isAuthorOfPublication.latestForDiscovery234a20c0-893c-561a-8c90-6f5be5be5b9b
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
wps4465.pdf
Size:
302.46 KB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
wps4465.txt
Size:
209.32 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers