• Corpus ID: 2457410

Firms as Surrogate Intermediaries: Evidence from Emerging Economies

  title={Firms as Surrogate Intermediaries: Evidence from Emerging Economies},
  author={Hyun Song Shin and Laura Yi Zhao},
A firm can finance investment either by borrowing or by drawing on cash balances, so that financial asset and liability changes tend to have opposite signs. In contrast, financial intermediaries borrow in order to lend, so that financial asset and liability changes have the same sign. Large non-financial firms in China and India behave like intermediaries rather than textbook non-financial firms. We explore the role of nonfinancial firms in the shadow banking system. The evidence from China and… 
Shadow Banking Activities in Non-Financial Firms: Evidence from China
This study examines a particular form of shadow banking activities performed by non-financial firms, in which firms borrow in order to lend, acting as financial intermediaries. We identify the
Shadow Banking and Investment: Evidence from Credit Intermediation of Non-Financial Firms in China June 2017
We investigate how credit intermediation (CI) conducted by Chinese non-financial firms differs from formal bank lending in affecting the link between leverage and investment. We identify credit
The Economics of Shadow Banking : Lessons from Surrogate Intermediaries in China ∗
The shadow banking sector has grown tremendously in China in the last decade, developing in parallel with the rise of non-bank lenders in western economies. Chinese non-financial firms supply credit
Why do Indian Firms Borrow in Foreign Currency?
We investigate why firms in emerging economies such as India borrow in foreign currency. The results of a dynamic panel regression approach suggest that both firm-specific factors and macroeconomic
Non-Financial Corporations from Emerging Market Economies and Capital Flows
Non-financial corporations from emerging market economies (EMEs) have increased their external borrowing significantly through the offshore issuance of debt securities. Having obtained funds abroad,
Liquidity Shocks and 'Borrow to Lend' Shadow Banking Activities
Using quarterly financial statements data of listed firms during 2008-2016, this paper identifies the “borrow to lend” shadow banking activities of non-financial firms in China by examining the
Corporate Foreign Bond Issuance and Interfirm Loans in China
This paper uses firm-level data to document and analyze international bond issuance by Chinese non-financial corporations and the use of the proceeds of issuance. We find that dollar issuance is
Foreign Currency Borrowing of Corporations as Carry Trades: Evidence from India
We establish that macroprudential policies limiting capital flows can curb risks arising from corporate foreign currency borrowing in emerging markets. Using detailed firm-level data from India, we
The Boom of Corporate Debt in Latin America: Carry Trade or Investment?
Previous research shows that due to a decline in international yields following the recent global crises corporations in emerging markets are issuing more debt in the international markets (offshore


A Financial System Perspective on Japan's Experience in the Late 1980s
This paper revisits the events of the 1980s bubble in Japan in light of the lessons learned from the subprime crisis in the United States. Our focus is on the role played by sectoral developments in
International Corporate Governance and Corporate Cash Holdings
Abstract Agency problems are an important determinant of corporate cash holdings. For a sample of more than 11,000 firms from 45 countries, we find that corporations in countries where shareholders
Why Do Firms Hold Cash? Evidence from Emu Countries
This paper investigates the determinants of corporate cash holdings in EMU countries. Our results suggest that cash holdings are positively affected by the investment opportunity set and cash flows
What Drives Corporate Liquidity? An International Survey of Cash Holdings and Lines of Credit
We survey chief financial officers from 29 countries to examine whether and why firms use lines of credit versus non-operational (excess) cash for their corporate liquidity. We find that these two
Cash Holdings and Corporate Diversification
This paper studies the relation between corporate liquidity and diversification. The key finding is that multidivision firms hold significantly less cash than stand-alone firms because they are
Why Do Firms Hold so Much Cash? A Tax-Based Explanation
U.S. corporations hold significant amounts of cash on their balance sheets, and these cash holdings have been justified in the existing empirical literature by transaction costs and precautionary
Corporate Cash Reserves and Acquisitions
The acquisition behavior of cash-rich firms is examined for evidence of free cash flow-related behavior. A model of cash management is developed and used to identify a sample of cash-rich firms. The
Testing the Pecking Order Theory of Capital Structure
The pecking order theory of corporate leverage is tested against the static tradeoff theory of corporate leverage, using a broad cross-section of US firms over the period 1980-1998. A derivation of
Financial Constraints, Investment, and the Value of Cash Holdings
Previous studies report that cash holdings are more valuable for financially constrained firms than for unconstrained firms. We examine (i) why this is so and (ii) why some constrained firms appear