Title: Ownership, Internal Capital Market, and Financing Costs
Abstract: The development of China's financial markets lags behind its economic development, which has set constraints for firms to obtain external finance. In practice, Chinese firms employ an internal capital market to mitigate financial constraints. We provide a case study and empirical analysis to investigate both the determinants for the establishment of an internal capital market and its economic consequence. We find that private enterprises (PEs) have greater motivation to establish an internal capital market and to allocate capital by the market-oriented way. In addition, we find that the internal capital market can help firms reduce financing costs, especially in PEs.
Publication Year: 2016
Publication Date: 2016-02-29
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 21
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot