Large private shareholders, industrial policies and industrial loans of city commercial banks: Evidence from China

ABSTRACT: We show that large private shareholders have an information advantage about their industry; this can alleviate the information asymmetry suffered by banks, and consequently, increase bank lending to these shareholders’ industry. Using a sample of Chinese city commercial banks, we show that an increase in the large private shareholders’ shareholding of banks increases bank lending to these shareholders’ industry. Importantly, using Chinese local government industrial policy as a moderator, we find that industrial policies have a positive and significant moderating effect on the relationship between large private shareholders and banks’ industry-specific lending. This relationship strengthens when local industrial policy supports these shareholders’ industry. This helps explain why banks pre

SUBMITTER: Liu J 

PROVIDER: S-EPMC9731413 | biostudies-literature | 2022 Jan

REPOSITORIES: biostudies-literature