How Does Fiscal Policy Affect Bank Credit? Evidence from China | Zendy

Huan Yan | Zendy; Weiguo Xiao | Zendy; Qi Deng | Zendy; Sisi Xiong | Zendy

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How Does Fiscal Policy Affect Bank Credit? Evidence from China

Author(s) -

Huan Yan,

Weiguo Xiao,

Qi Deng,

Sisi Xiong

Publication year - 2021

Publication title -

discrete dynamics in nature and society

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.264

H-Index - 39

eISSN - 1607-887X

pISSN - 1026-0226

DOI - 10.1155/2021/6790245

Subject(s) - collateral , market liquidity , vector autoregression , chinese financial system , financial system , monetary economics , bank credit , channel (broadcasting) , business , credit risk , china , economics , finance , electrical engineering , political science , law , engineering

Using a set of Chinese economic data and a structural vector autoregression (SVAR) model, this paper investigates the transmission channels of fiscal policy to bank credit in China. We find that increases in tax revenue can increase bank credit through external financing premium channel, collateral channel, and bank liquidity channel. We also find that increases in government spending can reduce bank credit through bank liquidity channel and increase bank credit through external financing premium channel and collateral channel.

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