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Essays in Chinese firm-bank switching

Huang, Jiayi 2019. Essays in Chinese firm-bank switching. PhD Thesis, Cardiff University.
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This thesis consists of three empirical studies that investigate firms’ switch behaviour and the change of firm-bank relationship in China’s loan market. The first study analyses the duration of firm-bank relationships and examines what drives firms in China to switch from one bank loan provider to another. A semi-parametric approach from survival analysis – Cox proportional hazard model is used to allow for a semiparametric hazard function after parametrically controlling for both time-varying and time-invariant covariates of firm-specific financial factors, industry factors, ownership characteristics, internal management changes, and external macroeconomic factors. Additionally, the thesis explores the impact of the global financial crisis, bank-financial and ownership characteristics. Moreover, the second study identifies the borrowing behaviour of listed firms using a marketing approach, which contributes to the cross-disciplinary literature by testing the applicability of a well-known model of customer purchasing behaviour, the Negative Binomial Distribution – Dirichlet model (or Dirichlet model), to the firm-bank relationship in the loan market. The third empirical study in this thesis examines the role of political connection in the firm-bank relationship. Matched data of firm-level data to bank loan duration provides a unique panel data set of relationship between China’s listed firms and their lending banks consisting of 2,102 firms listed on both the Shanghai Stock Exchange and Shenzhen Stock Exchange in the period of 1996-2016. The estimation results provide evidence that the main drivers of firms’ switch behaviour come from their credit needs, characteristics of firms and lending banks, and change of economic environment as well. Small, young and non-SOEs, firms with lower leverage, and multiple bank relationships, and non-politically connected firms are more likely to switch. Besides, a male CEO, long CEO tenure and a CEO switch during the lending relationship increases the likelihood of a switch. Understandably, the likelihood of a switch declined during the financial crisis years of 2008-9. The findings of this thesis imply that in an environment of growing commercialization of relationships the firm-bank relationship between state-owned enterprise (SOE) and state-owned banks (SOB) in China remains super-stable.

Item Type: Thesis (PhD)
Date Type: Completion
Status: Unpublished
Schools: Business (Including Economics)
Uncontrolled Keywords: Firm-bank switch, Lending and borrowing relationship, Political connection, CEO's characteristics, Survival analysis, Dirichlet model, Bank Loyalty, Matched firm-level data, State-owned enterprises, China.
Date of First Compliant Deposit: 19 March 2019
Last Modified: 19 Mar 2019 10:27

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