The SOE Channel of Monetary Policy Transmission: Evidence from China's Economic Stimulus Package

We examine the state-owned enterprises (SOEs) channel in monetary policy transmission in the context of China's 2008 stimulus package. Using a difference-in-difference approach, we show that the higher SOE share in the cities after the stimulus package, the more bank loans issued in the cities....

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Bibliographic Details
Published inAsian economic papers Vol. 20; no. 3; pp. 73 - 93
Main Authors Chen, Wenbin, Han, Shi-Zhuan, Li, Jie, Zhou, Tianhang
Format Journal Article
LanguageEnglish
Published One Rogers Street, Cambridge, MA 02142-1209, USA MIT Press 01.11.2021
MIT Press Journals, The
Subjects
Bank loans
Cities
Monetary policy
Public enterprise
China
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Summary:We examine the state-owned enterprises (SOEs) channel in monetary policy transmission in the context of China's 2008 stimulus package. Using a difference-in-difference approach, we show that the higher SOE share in the cities after the stimulus package, the more bank loans issued in the cities. Furthermore, we find that the role of SOEs in monetary policy transmission is more significant in underdeveloped cities and cities with a high level of government intervention. We adopt propensity score matching difference-in-difference to deal with potential endogeneity problem. The baseline results also survive a series of robustness tests.
Bibliography:2021
ISSN:1535-3516
1536-0083
DOI:10.1162/asep_a_00836