Firms as Surrogate Intermediaries: Evidence from Emerging Economies
نویسندگان
چکیده
A firm can finance investment either by borrowing or by drawing on cash balances, so that financial asset and liability changes tend to have opposite signs. In contrast, financial intermediaries borrow in order to lend, so that financial asset and liability changes have the same sign. Large non-financial firms in China and India behave like intermediaries rather than textbook non-financial firms. We explore the role of nonfinancial firms in the shadow banking system. The evidence from China and India is in contrast to US non-financial firms, which conform to the textbook predictions. Preliminary. This study forms part of the background research for the Asian Development Bank technical assistance program on “Financial Regulatory Reform in Asia”. Corresponding author: Bendheim Center for Finance, Princeton University, 26 Prospect Avenue, Princeton, NJ 08540, USA; [email protected] Asian Development Bank; [email protected]
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