The shadow banking behaviour in internet of things: evidence from economy operation mode in China
Abstract
With the acceleration of world economic integration and enterprise management globalization, the advent of Internet of things based on Internet and information technology has become inevitable. The Internet of things also brings about a cascading effect between firms’ shadow banking behaviour and bank connections. This study investigates the relationship between firms’ shadow banking behaviour and bank connections by analysing a sample of Chinese listed firms in Internet of things industry. The results show that bank connections eliminate information asymmetry between banks and firms, bank connections are positively related to firms’ long-term debt, and as long-term debt increases, firms’ shadow banking behaviour also increases. Furthermore, this finding shows very strong robustness, the empirical analysis provides sufficient evidence that firms’ shadow banking behaviour increased with bank connections in Internet of things industry. In addition, the evidence also shows that the tendency of shadow banking behaviour is more pronounced in non-state-owned enterprises (NSOEs) than state-owned enterprises (SOEs) by sub-sample sensitivity analysis.
First published online 17 March 2022
Keyword : internet of things, shadow banking behaviour, bank connections, sub-sample sensitivity analysis
How to Cite
Yang, L., & Shen, C.-H. (2022). The shadow banking behaviour in internet of things: evidence from economy operation mode in China. Technological and Economic Development of Economy, 1-21. https://doi.org/10.3846/tede.2022.16461
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Miller, M. (2021). Choosing the narrative: The shadow banking crisis in light of Covid. Open Economies Review, 32(2), 291–310. https://doi.org/10.1007/s11079-020-09614-2
Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. The Journal of Finance, 49(1), 3–37. https://doi.org/10.1111/j.1540-6261.1994.tb04418.x
Petersen, M. A., & Rajan, R. G. (1995). The effect of credit market competition on lending relationships. The Quarterly Journal of Economics, 110(2), 407–443. https://doi.org/10.2307/2118445
Shin, H. S., & Zhao, L. Y. (2013). Firms as surrogate intermediaries: Evidence from emerging economies (Princeton Working Paper).
Yao, Z., Gu, D., & Cao, W. (2019). SOEs as intermediation: Leakage effect under financial repression. Pacific-Basin Finance Journal, 53, 349–361. https://doi.org/10.1016/j.pacfin.2018.12.001
Zhai, S., Xie, L., & Zhang, S. (2017). Bank connections and corporate risk-taking: Evidence from China. Asia-Pacific Journal of Accounting & Economics, 24(1–2), 183–194. https://doi.org/10.1080/16081625.2015.1105831
Zhang, G. (2015). Holding Bank ownership and firms’ participation in the shadow banking: From the perspective of ownership structure. South China Journal of Economics, 9, 16–40. https://doi.org/10.19592/j.cnki.scje.2015.09.002
Berger, A. N., & Udell, G. F. ( 1995). Relationship lending and lines of credit in small firm finance. The Journal of Business, 68(3), 351–381. http://www.jstor.org/stable/2353332
Berger, A. N., & Udell, G. F. (2002). Small business credit availability and relationship lending: The importance of bank organisational structure. The Economic Journal, 112(477), F32–F53. https://doi.org/10.1111/1468-0297.00682
Bertay, A. C., Demirgüç-Kunt, A., & Huizinga, H. (2015). Bank ownership and credit over the business cycle: Is lending by state banks less pro-cyclical? Journal of Banking & Finance, 50, 326–339. https://doi.org/10.1016/j.jbankfin.2014.03.012
Bonfim, D., Dai, Q., & Franco., F. (2018). The number of bank relationships and borrowing costs: The role of information asymmetries. Journal of Empirical Finance, 46, 191–209. https://doi.org/10.1016/j.jempfin.2017.12.005
Castelli, A., Dwyer, G. P., & Hasan, I. (2012). Bank relationships and firms’ financial performance: The Italian experience. European Financial Management, 18(1), 28–67. https://doi.org/10.1111/j.1468-036X.2009.00531.x
Degryse, H., & Cayseele, P. V. (2000). Relationship lending within a bank-based system: Evidence from European small business data. Journal of Financial Intermediation, 9(1), 90–109. https://doi.org/10.1006/jfin.1999.0278
Deng, K., Ge, W., & He, J. (2021). Inside debt and shadow banking. Journal of Corporate Finance, 69, 102038. https://doi.org/10.1016/j.jcorpfin.2021.102038
Dong, F., & Doukas, J. (2021). The effect of managers on M&As. Journal of Corporate Finance, 68, 101934. https://doi.org/10.1016/j.jcorpfin.2021.101934
Du, J., Li, C., & Wang, Y. (2017). A comparative study of shadow banking activities of non-financial firms in transition economies. China Economic Review, 46, S35–S49. https://doi.org/10.1016/j.chieco.2016.09.001
Duong, K. T., Banti, C., & Instefjord, N. (2021). Managerial conservatism and corporate policies. Journal of Corporate Finance, 68, 101973. https://doi.org/10.1016/j.jcorpfin.2021.101973
Engelberg, J., Gao, P., & Parsons, C. A. (2012). Friends with money. Journal of Financial Economics, 103(1), 169–188. https://doi.org/10.1016/j.jfineco.2011.08.003
Espenlaub, S., Khurshed, A., & Sitthipongpanich, T. (2012). Bank connections, corporate investment and crisis. Journal of Banking & Finance, 36(5), 1336–1353. https://doi.org/10.1016/j.jbankfin.2011.11.024
Fu, T., & Li, Y. (2021). Imperial colonialism and shadow banking: Evidence from northeastern China, 1898–1911. Finance Research Letters, 41, 102001. https://doi.org/10.1016/j.frl.2021.102001
Hambrick, D. C., & Mason., P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206. https://doi.org/10.2307/258434
Han, X., Tian, G., & Li, J. (2017). Shadow banking business and financial structure of non-financing enterprises – Empirical evidence from Chinese listed companies. Studies of International Finance, 10, 44–54. https://doi.org/10.16475/j.cnki.1006-1029.2017.10.005
Hao, X., Shi, J., & Yang, J. (2014). The differential impact of the bank-firm relationship on IPO underpricing: Evidence from China. Pacific-Basin Finance Journal, 30, 207–232. https://doi.org/10.1016/j.pacfin.2014.10.004
Hilt, E. (2018). Banks, insider connections, and industrialization in New England: Evidence from the Panic of 1873 (NBER Working Paper No. 24792). https://doi.org/10.3386/w24792
Kloks, P. (2021). Matthias Thiemann: The growth of shadow banking: A comparative institutional analysis. Financial Markets and Portfolio Management, 35(2), 269–272. https://doi.org/10.1007/s11408-021-00378-4
Liu, J., & Ma, Q. (2021). The impact of shadow banking on systemic financial risk in China: An empirical analysis based on provincial panel data. Jilin University Journal Social Sciences Edition, 61(6), 107–115. https://doi.org/10.15939/j.jujsse.2021.06.jj2
Lu, Y., Guo, H., Kao, E. H., & Fung, H.-G. (2015). Shadow banking and firm financing in China. International Review of Economics & Finance, 36, 40–53. https://doi.org/10.1016/j.iref.2014.11.006
Lyu, J., Wan, Y., & Zhang, L. (2021). Research on shadow banks and the effect of monetary policy in China – Financial accelerator model of the shadow banking system based on the monopolistic competition. Journal of Hebei University of Economics and Business, 42(2), 73–84. https://doi.org/10.14178/j.cnki.issn1007-2101.20201104.002
Miller, M. (2021). Choosing the narrative: The shadow banking crisis in light of Covid. Open Economies Review, 32(2), 291–310. https://doi.org/10.1007/s11079-020-09614-2
Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. The Journal of Finance, 49(1), 3–37. https://doi.org/10.1111/j.1540-6261.1994.tb04418.x
Petersen, M. A., & Rajan, R. G. (1995). The effect of credit market competition on lending relationships. The Quarterly Journal of Economics, 110(2), 407–443. https://doi.org/10.2307/2118445
Shin, H. S., & Zhao, L. Y. (2013). Firms as surrogate intermediaries: Evidence from emerging economies (Princeton Working Paper).
Yao, Z., Gu, D., & Cao, W. (2019). SOEs as intermediation: Leakage effect under financial repression. Pacific-Basin Finance Journal, 53, 349–361. https://doi.org/10.1016/j.pacfin.2018.12.001
Zhai, S., Xie, L., & Zhang, S. (2017). Bank connections and corporate risk-taking: Evidence from China. Asia-Pacific Journal of Accounting & Economics, 24(1–2), 183–194. https://doi.org/10.1080/16081625.2015.1105831
Zhang, G. (2015). Holding Bank ownership and firms’ participation in the shadow banking: From the perspective of ownership structure. South China Journal of Economics, 9, 16–40. https://doi.org/10.19592/j.cnki.scje.2015.09.002