Government Intervention and Financial Access: Evidence from China
Government Intervention and Financial Access: Evidence from China

Summary/Abstract: This paper distinguishes between different forms of government intervention in a micro economy, including a firm’s tax burden, regulatory stringency, state shares and collective shares. To the best of my knowledge, I offer a first attempt to explore how these types of government intervention affect a firm’s financial access. With evidence from China, I use the 2005 World Bank Investor Climate survey data to confirm that a firm’s financial access is promoted by its tax burden and regulatory stringency but constrained by its state shares and collective shares. My estimates are robust to the potential endogeneity issue, the different measures of financial access and different samples. Given that most governments explicitly or implicitly dictate financial resources, this paper offers general applications for government policies or corporate finance.

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