Ownership concentration and credit constraints under the market mechanism
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| Title | Ownership concentration and credit constraints under the market mechanism
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| Author | Chen Xing |
| Organization | The Center for Economic Research，Shandong University |
| Email | hongchenjushi@126.com |
| Key Words | Ownership Concentration; Credit Availability; Law and Finance; Investor Protection |
| Abstract | In this paper, we use Enterprise Survey 2012 in China by World Bank to examine the impact of the ownership concentration on firms’ credit constraints in the market environment, which can bring us a better understanding of the capital structure. We also investigate whether ownership concentration is an alternative way to protect the investors for countries whose legal system is not perfect. We find that the ownership concentration has a significant negative impact on firms’ credit availability in the market environment. Although firms are in different industries and locations, this impact always exists. Our results show that investors’ concerns about the encroachment on their rights from major shareholders are an important factor hindering firms’ access to the credit. In addition, our results don’t support the thesis that ownership concentration may replace law as a way to protect the investors in the “Law and Finance” field. |
| Serial Number | WP735 |
| Time | 2014-10-21 |
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