Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/169340
Authors: 
Ferrarini, Benno
Hinojales, Marthe
Scaramozzino, Pasquale
Year of Publication: 
2017
Series/Report no.: 
ADB Economics Working Paper Series 509
Abstract: 
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. This paper assesses the financial fragility of the Chinese economy by looking at risk factors in the nonfinancial sector. We apply quantile regressions 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.
Subjects: 
corporate debt
debt sustainability
panel quantile regression
People's Republic of China
JEL: 
G01
G21
H30
H60
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/igo/
Document Type: 
Working Paper

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