The finance–growth nexus has been a central question in understanding the unprecedented success of the Chinese economy. With unique data on all the registered firms in China, we build extensive ownership networks, reflecting firm-to-firm equity investment relationships, and show that thesenetworks have been expanding rapidly since the 2000s, with more than five million firms in at least one network by 2017. Entering a network and increasing network centrality, both globally and locally, are associated with higher firm growth. Such positive network effects tend to be more pronounced for high productivity and privately owned firms. The RMB 4 trillion stimulus, mostly in the form of newly issued bank loans and launched by the Chinese government in November 2008 in response to the global financial crisis, partially ‘crowded out’ the positive network effects. Our analysis suggests that equity ownership networks and bank credit tend to act as substitutes for state-owned enterprises, but as complements for privately owned firms in promoting growth.

International debt financing is important for the development of emerging economies, as it allows firms from emerging markets (EMs) to have access to greater liquidity, a wider investor base, and more effective laws and regulations. However, the financial crisis in the late 1990s, coupled with recent rapid growth in corporate leverage in emerging markets, have forced policy makers to re-evaluate the risk of offshore financing and its role in EMs’ development. In this paper, we investigate the bonding/signaling effect of offshore financing to those firms in subsequent domestic market financing through the improvement of information disclosure and creditability. With a comprehensive database covering bond issuances by Chinese firms both in domestic and offshore markets over the period of 2010 to 2015, we find that: 1) The offshore bond issuance has a positive bonding/signaling effect on firm’s subsequent debt-raising in the domestic market in terms of longer maturity of corporate issuance and lower funding cost. 2) If the offshore issuance occurs in a stricter jurisdiction providing more effective investor protection and stringent disclosure, or with an international investment-grade rating, it will have a positive influence on firm’s subsequent debt-raising domestically. 3) Offshore debt financing improves the long-term firm performance, especially for financially-constrained companies. Our study presents new evidence for the role of the offshore market in promoting both the domestic institutional environment as well as firm growth, and provides policy implications for developing a broad offshore corporate bond market in emerging economies.

In geographically segmented credit markets, local real estate booms can divert capital away from manufacturing firms, create capital scarcity, increase local real interest rates, lower real wages, and cause underinvestment and relative decline in the industrial sector. Using exogenous variation in the administrative land supply across 172 Chinese cities, we show that the predicted variation in real estate prices does indeed cause substantially higher capital costs for manufacturing firms, reduce their bank lending, lower their capital intensity and labor productivity, weaken firms' financial performance, and reduce their TFP growth by economically significant magnitudes. This evidence highlights macroeconomic stability concerns associated with real estate booms.