FINANCE AND ENTERPRISE PERFORMANCE: DOES ETHNICITY MAKE A DIFFERENCE?

Abstract

Using 2004-2007 firm-level micro data for enterprises in Xinjiang Uygur Autonomous Re gion of China, weinve stigatethere lativeimportanceof bank loans and tradecre dit in promoting enterprise performance. We find statistical evidence that access to bank loans plays a significant role in improving enterprise productivity, but it has a significantly negative impact on profitability; the result continues to hold when taking into account the ethnicity effect. Moreover, there is no evidence of an ethnicity gap for the effect of receiving bank loans on enterprise performance. We also cannot find strong evidence that trade credit influences productivity or profitability.