Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 28, 2022 erstellt
Description:
In 2015, China implemented a debt-to-bond swap program that required local governments to replace outstanding debts with local government bonds, which are considered low-risk assets for commercial banks under Basel III regulations. We study the empirical effects of the debt-swap program on bank lending, using confidential loan-level data from one of China's ``Big Five'' commercial banks, combined with province-level government debt data and firm-level balance sheet data in China's manufacturing sector. Consistent with theory, we obtain robust evidence that implementing the debt-swap program significantly reduced credit spreads on loans to privately owned firms relative to state-owned enterprises (SOEs), and the reductions in credit spreads are significantly larger in provinces with more outstanding government debt