State ownership and credit rationing: Evidence From China✩

We investigate the impact of a firm's ownership on credit rationing. We find that state-owned enterprises (SOEs) are less likely to be credit rationed than non-state-owned enterprises (non-SOEs). After controlling for a large set of control variables, we find that SOEs are 12.22 percent less likely to experience credit rationing in comparison to non-SOEs. This finding is robust to different definitions of SOEs and other regression methods accounting for omitted variables bias and endogeneity problems. Furthermore, the effects of state ownership on credit rationing are heterogeneous among different cities. Specifically, SOEs are less likely to be credit rationed in cities with low financial development and high government intervention. This may reflect the fact that implicit government guarantees of SOEs are more effective in these cities.