Affiliation:
1. School of Economics & Management South China Normal University Guangzhou China
2. School of Management Xiamen University Xiamen China
3. School of Business Center for Accounting, Finance and Institutions, Sun Yat‐Sen University Guangzhou China
Abstract
AbstractBy exploiting China's 2013 interest rate deregulation, we analyse whether the financial resource curse exists. The results show that after the deregulation, low‐risk firms with more credit resources engage in more shadow banking activities, which preliminarily confirms the existence of the financial resource curse. Moreover, this effect is pronounced in firms located in regions with high credit marketisation and firms with bank connections. However, this effect is weakened in firms with strong internal governance and external supervision, and SOEs. Finally, additional analyses reveal that active participation in shadow banking activities hinders low‐risk firms' long‐term growth, and receives unfavourable market feedback.
Funder
National Social Science Fund of China
National Natural Science Foundation of China
Basic and Applied Basic Research Foundation of Guangdong Province