Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314134 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Applied Economics [ISSN:] 1667-6726 [Volume:] 24 [Issue:] 1 [Year:] 2021 [Pages:] 393-408
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
We explore the impact of financial friction on resource misallocation and total factor productivity (TFP) of China. First, the mathematical models are derived to clarify the mechanism and consequence of resource misallocation, showing that financial friction leads to resource mismatch, and thus results in the loss of TFP. Second, taking the dataset of China as the research sample, we establish econometric models to explore the impacts of financial friction on resource allocation and TFP. The results show that financial friction has negative impact on the TFP of China. In addition, the friction of financial markets will lead to factor distortion. Furthermore, the results of mechanism analysis demonstrate that resource misallocation is an important channel through which financial friction deteriorates the TFP of China, which is verified at the enterprise and province levels, respectively.
Subjects: 
China
Financial friction
resource misallocation
total factor productivity (TFP)
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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