Abstract
This paper studies the relationship between investment and cash flow in the manufacturing sector of Shanghai in order to examine the existence of lending bias in this sector. Our empirical results confirm that the investment of manufacturing enterprises in Shanghai is sensitive to cash flow and that cash-flow variables play a significant role in determining investment. In addition, private enterprises are significantly more liquidity-constrained than state-owned enterprises in terms of the availability of cash flow while international joint ventures are the least liquidity-constrained in terms of replacement capital. Furthermore, collective-owned enterprises are less liquidity-constrained than state-owned enterprises in terms of the availability of cash flow. This may be due to the inter-firm loans and close relationship between state-owned and collective-owned enterprises.
| Original language | English |
|---|---|
| Pages (from-to) | 301-316 |
| Number of pages | 16 |
| Journal | Journal of Comparative Economics |
| Volume | 26 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 1 Jun 1998 |
Bibliographical note
The research assistance from Wan Kai Hong is gratefully acknowledged. We also thank the comments made by the anonymous referees and Professor John P. Bonin. All remaining errors are, of course, ours.Funding
The authors thank the financial support from the HK Institute of Business Studies, Faculty of Business, Lingnan College and the Chinese Management Research Group, Faculty of Business Administration, The Chinese University of Hong Kong for research support.