Market Facilitation by Local Government and Firm Efficiency : Evidence from China

This paper uses data from a large survey of Chinese firms to investigate whether local government efforts to facilitate market development improve firm efficiency. Both government provision of information about products, markets, and innovation and government assistance in arranging loans are positively associated with firm efficiency. Those private firms with weak access to and knowledge of financial, input, and product markets benefit most from such assistance. These patterns are robust across multiple estimation approaches. Case studies of specific types of market facilitation by local governments are provided. The evidence is consistent with the notion that government facilitation can help some firms overcome market failures in the early stages of development. The paper argues that changing fiscal dynamics that forced local governments to become increasingly self-reliant in generating revenue and a government promotion system based on local economic performance compelled these efforts at market facilitation.

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Bibliographic Details
Main Authors: Cull, Robert, Xu, Lixin Colin, Yang, Xi, Zhou, Li-An, Zhu, Tian
Language:English
en_US
Published: World Bank, Washington, DC 2013-11
Subjects:ACCESS TO BANK, ACCESS TO BANK LOANS, ACCESS TO FINANCE, ACCESS TO FORMAL FINANCE, ACCOUNTANT, ACCOUNTING, ASSOCIATIONS, BANK, BANK LOAN, BANK LOANS, BANK POLICIES, BANK POLICY, BANKING SYSTEM, BANKS, BIAS, BONDS, BORROWERS, BORROWING, BRIBE, BRIBES, BUSINESS SUCCESS, CAPITAL, CAPITAL INVESTMENT, CHECK, CHECKS, COLLATERAL FOR BANK LOANS, COLLATERAL REGISTRIES, COMMERCIAL CREDIT, COMPARATIVE ECONOMICS, CONTRACT, CONTRACT ENFORCEMENT, CONTRACTING, COOPERATIVE, COOPERATIVE BANKING, COORDINATION FAILURE, CORPORATE GOVERNANCE, CORRUPTION, COSTS, CREDIT, CREDIT CONSTRAINTS, CREDIT COOPERATIVES, CREDIT MARKET, CREDIT MARKETS, CREDIT REPORTING, CREDIT REPORTING AGENCIES, CREDIT REPORTING SYSTEMS, DEBT, DECENTRALIZATION, DEFAULT, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT POLICY, DISCRIMINATION, DIVIDENDS, DOMESTIC MARKET, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC HISTORY, ECONOMIC PERFORMANCE, ECONOMIC REFORM, ECONOMIC RESEARCH, ECONOMIC SUCCESS, ECONOMIC THEORY, ECONOMICS, EFFECTS, EFFICIENCY, EMPLOYEE, EMPLOYEES, EMPLOYMENT, ENDOWMENTS, ENTERPRISES, ENTREPRENEURSHIP, ENTRY BARRIERS, EQUIPMENT, EQUITY, EQUITY INVESTMENT, EQUITY INVESTMENTS, EXCHANGE, EXPENDITURE, EXPENDITURES, EXPORTS, EXPROPRIATION, EXTERNAL FINANCE, EXTERNAL FINANCING, FACE VALUE, FACILITATION, FARMERS, FEES, FINANCE, FINANCIAL CAPACITY, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL INTERMEDIATION, FINANCIAL MARKET, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SUPPORT, FINANCING REQUIREMENT, FIRM PERFORMANCE, FISCAL POLICY, FISCAL REFORM, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FRAUD, GDP, GDP PER CAPITA, GLOBALIZATION, GOOD, GOODS, GOVERNMENT DEBT, GOVERNMENT FUNDING, GOVERNMENT GRANTS, GOVERNMENT INTERVENTION, GOVERNMENT INTERVENTIONS, GOVERNMENT OWNERSHIP, GOVERNMENT POLICIES, GUARANTEES, GUARANTOR, HOUSEHOLDS, HUMAN CAPITAL, INCENTIVES, INCOME, INCOME LEVEL, INCOME LEVELS, INCOME TAX, INDUSTRIALIZATION, INDUSTRY, INFLUENCE, INFORMAL FINANCE, INFORMAL FINANCING, INFORMATION ASYMMETRIES, INFORMATION ASYMMETRY, INFORMATION INFRASTRUCTURE, INFORMATION SERVICE, INFORMATION TECHNOLOGY, INNOVATION, INPUTS, INSECURE PROPERTY, INSTITUTIONAL REFORMS, INSTRUMENTS, INTEREST, INTEREST PAYMENTS, INTERESTS, INTERNATIONAL BANK, INTERNATIONAL TRADE, INVESTING, INVESTMENT, INVESTMENT CLIMATE, INVESTMENTS, JUDICIAL SYSTEM, LABOR, LABOR PRODUCTIVITY, LACK OF COLLATERAL, LACK OF INFORMATION, LAND, LAND USE, LAW, LEGAL SYSTEM, LENDERS, LENDING, LOAN DECISIONS, LOANS, LOCAL BUSINESS, LOCAL BUSINESSES, LOCAL ECONOMIES, LOCAL ECONOMY, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, MACROECONOMICS, MANAGEMENT, MARKET DEVELOPMENT, MARKET ECONOMY, MARKET ENVIRONMENT, MARKET FAILURE, MARKET FAILURES, MARKET TRADE, MATURE MARKETS, MIXED ECONOMY, MOTIVATION, NEW ENTRANTS, ORGANIZATIONS, OVERDRAFT, OVERDRAFT FACILITIES, PATENTS, PAYMENT, PEOPLE, PLANNED ECONOMY, PLEDGE, POLITICAL ECONOMY, POLITICAL STABILITY, POOR ACCESS, PRICES, PRIVATE ENTERPRISE, PRIVATE ENTERPRISES, PRIVATE INVESTORS, PRIVATE PARTIES, PRIVATE PROPERTY, PRIVATIZATION, PRODUCT MARKETS, PRODUCTION, PRODUCTIVITY, PROJECTS, PROPERTY, PROPERTY RIGHTS, PROPERTY RIGHTS PROTECTION, PUBLIC POLICY, RENT, RENTS, REPAYMENT, REVENUE, REVENUES, RISK, RURAL CREDIT, SALES TAXES, SAVINGS, SAVINGS BANKS, SECRETARIES, SERVICES, SHARE, SHAREHOLDERS, SHORT-TERM FINANCING, SMALL BUSINESS, SOCIAL SERVICES, STRATEGIES, STRUCTURAL CHANGE, SUBSIDIES, SUPPLIERS, SUPPLY, TANGIBLE ASSETS, TAX BURDENS, TAX RATE, TAX RATES, TAX REDUCTIONS, TAXES, TELECOMMUNICATIONS, THEORY, TOTAL FACTOR PRODUCTIVITY, TRADE CREDIT, TRADE CREDITS, TRADING, TRAINING, TRANSFERS, TRANSITION COUNTRIES, TRANSITION ECONOMIES, TURNOVER, URBAN AREA, UTILITY, VALUE ADDED, VENTURE CAPITAL, VILLAGE, WAGES, WORKING CAPITAL, government facilitation,
Online Access:http://documents.worldbank.org/curated/en/2013/11/18478923/market-facilitation-local-government-firm-efficiency-evidence-china
https://hdl.handle.net/10986/16927
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