Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/201689
Authors: 
Huang, Yi
Panizza, Ugo
Portes, Richard
Year of Publication: 
2018
Series/Report no.: 
Graduate Institute of International and Development Studies Working Paper 06-2018
Abstract: 
This paper uses firm-level data to document and analyze international bond issuance by Chinese non-financial corporations and the use of the proceeds of issuance. We find that dollar issuance is positively correlated with the differential between domestic and foreign interest rates. This interest rate differential increases the likelihood of dollar bond issuance by risky firms and decreases the likelihood of dollar bond issuance of exporters and profitable firms. Moreover, and most strikingly, we find that risky firms do more inter-firm lending than non-risky firms and that this lending rose significantly after the regulatory shock of 2008-09, when the authorities sought to restrict the financial activities of risky firms. Risky firms try to boost profitability by engaging in speculative activities that mimic the behavior of financial institutions while escaping prudential regulation that limits risk-taking by financial firms.
Subjects: 
China
bond markets in emerging markets
carry trade
shadow banking
JEL: 
F34
F32
G15
G30
Document Type: 
Working Paper
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