Interest Rate Liberalization and Firm Leverage in China: Effects and Channels

Table 13

Firms’ financial liability versus operating liability during interest rate liberalization.

Panel A: grouped regression results
Variables	Filia	Opelia	Filia	Opelia
	(1)	(2)	(3)	(4)
Irlib1	−0.5256	0.0859
	(−3.69)	(0.64)
Irlib2			−0.2626	0.0429
			(−3.69)	(0.64)
Controls	Yes	Yes	Yes	Yes
Constant	0.4414	1.9677	0.2456	1.9997
	(0.27)	(1.34)	(0.15)	(1.33)
Firm effects	Yes	Yes	Yes	Yes
Year effects	Yes	Yes	Yes	Yes
N	17956	17956	17956	17956
Adj-R^2	0.0419	0.0115	0.0419	0.0115
Panel B: difference analysis results
	Coefficient	p-value	Conclusion
Irlib1	β Irlib1⟶Filiavs. βIrlib1⟶Opelia = −0.5256vs.0.0859	p ≤ 0.001	β Irlib1⟶Filia < βIrlib1⟶Opelia
Irlib2	β Irlib2⟶Filiavs. βIrlib2⟶Opelia = −0.2626vs.0.0429	p ≤ 0.001	β Irlib2⟶Filia < βIrlib2⟶Opelia

Note. , , and indicate statistical significance at 1percent, 5 percent, and 10 percent, respectively. Two alternative measures of interest rate liberalization are used in. The t-statistics are in parentheses, we calculate them on the basis of standard errors that are robust to heteroscedasticity.