An Attempt to Profile the Finances of China’s Enterprise Sector

November 1, 2001

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Cem Karacadag, and Paul J. Heytens An Attempt to Profile the Finances of China’s Enterprise Sector, (USA: International Monetary Fund, 2001) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the leverage, efficiency, and debt-repayment capacity of the Chinese enterprise sector using aggregate and firm level data. The cash coverage of interest expense, in particular, is used as a bridge between enterprise finances and banks' asset quality in order to develop insights on banking soundness. The interest coverage analysis corroborates the high level of nonperforming loans in the financial system. This underscores the urgency of hardening budget constraints on state-owned enterprises and stemming the flow of new bad loans by accelerating ongoing structural reforms.

Subject: Bank credit, Economic sectors, Financial institutions, Financial sector, Money, Nonperforming loans, State equity participation, Stocks, Taxes

Keywords: Bank credit, Chinese corporate sector, Chinese economy, Chinese financial sector, Coverage ratio, Enterprise interest coverage, Financial sector, Fixed asset, Interest, Negative equity, Nonperforming loans, Nonviable SOEs, NPL ratio, Public enterprise, Ratio, State equity participation, Stocks, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/182
Stock No:

WPIEA1822001
ISBN:

9781451859263
ISSN:

1018-5941

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