The impact of China's fiscal and monetary policy responses to the great recession: An analysis of firm-level Chinese data

Wenjun Xue, Hakan Yilmazkuday, Jason E. Taylor

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

This paper investigates the effects of Chinese financial and fiscal policies designed to counter the worldwide Great Recession of 2008. We examine how policies designed to increase bank credit and health (i.e., asset liquidity, capital adequacy ratio, profitability, and bad loan ratio) influenced firm-level output, employment and investment. We also explore the impact of China's expansionary fiscal policy with regard to these firm-level variables. We find that the policy effects varied based on firm-level characteristics such as size, liability ratio, profitability, ownership and the industry in which the firm operates. With respect to the dynamic effects, our results suggest that Chinese financial and fiscal policies were generally effective in the short run, but their positive impacts ceased within two years.

Original languageEnglish
Article number102113
JournalJournal of International Money and Finance
Volume101
DOIs
StatePublished - Mar 2020

Keywords

  • 2008 economic stimulus plan
  • Banking system
  • Chinese recovery
  • Firm-level investigation
  • Panel VAR model
  • The great recession

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