Alex's China & the World Economy Part B: Corporate Sector I. Explaining the Chinese Puzzle 2 - The role of internal finance

Question 1

Which source is this whole section based on?

Answer 1

Guariglia, A., Liu, X., and L. Song (2011). Internal finance and growth:
Microeconometric evidence on Chinese firms.” Journal of Development Economics, 96,
79-94

Question 2

Introduce this paper and the motivation for this paper

Answer 2

For the first time in the Chinese context, we compute and analyze firm-level
measures of financing constraints

Question 3

Describe & explain how this paper links to related current literature

Answer 3

Question 4

Describe the data and summary statistics in the study for this section

Answer 4

• We use data from the Chinese National Bureau of Statistics for:
  ➢ 79,841 firms
  ➢ over the period 2000-2007.
  ➢ 499,001 observations
  ➢ Manufacturing and mining sectors.
• We focus on firms’ growth, where growth is intended as the growth of total assets.
• Total assets include:
  ➢ tangible fixed assets (36.3%)
  ➢ intangible fixed assets (1.9%)
  ➢ other fixed assets (4.6%)
  ➢ accounts receivable (17.9%)
  ➢ inventories (19%)
  ➢ other current assets (20.3%)
• Firms are classified into:
  ➢ State-owned (SOEs)
  ➢ Foreign-owned (including HK, Macao, Taiwan)
  ➢ Privately owned
  ➢ Collectively owned
• SOEs are typically larger compared to the other ownership groups. Yet, they exhibit
  lower cash flow and assets growth, as well as lower productivity.

Question 5

Describe the baseline specification for this paper

Answer 5