An Empirical Test of the “Financial Accelerator” in China: Evidence from the Chinese Industrial Enterprises Database

Jie Chen; Zhe Li

doi:10.3868/s060-003-014-0022-2

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Front. Econ. China ›› 2015, Vol. 10 ›› Issue (3) : 509-526. DOI: 10.3868/s060-003-014-0022-2

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An Empirical Test of the “Financial Accelerator” in China: Evidence from the Chinese Industrial Enterprises Database

Jie Chen¹ ,
Zhe Li²

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Abstract

The purpose of this paper is to test the applicability of the “financial accelerator” mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the implications of the “financial accelerator”. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and subsamples.

Keywords

Financial Accelerator / Leverage / Chinese Industrial Enterprises Database

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Jie Chen, Zhe Li. An Empirical Test of the “Financial Accelerator” in China: Evidence from the Chinese Industrial Enterprises Database. Front. Econ. China, 2015, 10(3): 509‒526 https://doi.org/10.3868/s060-003-014-0022-2