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Credit constraints and spillovers from foreign firms in China

Agarwal, Natasha; Milner, Chris; Ria�o, Alejandro

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Natasha Agarwal

Chris Milner

Alejandro Ria�o


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
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