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Credit constraints and spillovers from foreign firms in China

Credit constraints and spillovers from foreign firms in China Thumbnail


Natasha Agarwal

Chris Milner



This paper examines whether credit constraints affect Chinese firms’ absorption of productivity spillovers originating from the activity of foreign-owned firms. Using firm-level data for 2001–2005, we find evidence of positive spillovers originating from foreign-owned firms from countries other than Hong Kong, Macau and Taiwan for non-state owned Chinese firms operating in the same industry and province. Using an index of external finance dependence to measure credit constraints, we find that only non-state-owned firms operating in industries with external finance dependence below the index median exhibit significantly positive spillovers from the activity of foreign firms.


Agarwal, N., Milner, C., & Riaño, A. (2014). Credit constraints and spillovers from foreign firms in China. Journal of Banking & Finance Law and Practice, 48,

Journal Article Type Article
Publication Date Feb 12, 2014
Deposit Date Sep 8, 2015
Publicly Available Date Sep 8, 2015
Journal Journal of Banking & Finance
Print ISSN 1034-3040
Electronic ISSN 0378-4266
Publisher Thomson Reuters
Peer Reviewed Peer Reviewed
Volume 48
Keywords Foreign direct investment; Knowledge spillovers; Credit constraints; China
Public URL
Publisher URL


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