Using business registry data from China, we show that internal capital markets in business groups can play the role of financial intermediary and propagate corporate shareholders’ credit supply shocks to their subsidiaries. An average of 16.7% local bank credit growth where corporate...

It has been argued that Asia's remarkable economic achievements of the past 50 years build on institutional arrangements very different from the West, notably the central role of business groups (BGs). As Asian economies move from extensive to intensive growth, we enquire whether the business...