Qichun He & Meng Sun："Does Financial Liberalization Change the Sectoral Allocation of Investments? Macro Evidence from Chinese Provinces," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 49(S2), pages 6-22, March/2013.

Abstract:

Does financial liberalization affect how investment funds are allocated to competing sectors? We address this question using macro-level panel data for the period of reforms in the Chinese provinces, measuring the sectoral allocation of investments as the ratios of short-term bank loans allocated to agriculture, industry, and commerce, respectively, to total short-term loans. Both least square dummy variables (LSDV) and system estimations using the generalized method of moments (GMM) suggest that financial reform has a significant positive effect on the share of short-term loans allocated to agriculture and a significant negative effect on the share of short-term loans allocated to industry.