{
  "title": "An Attempt to Profile the Finances of China’s Enterprise Sector",
  "publication": "IMF Working Papers, November 1, 2001",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/an-attempt-to-profile-the-finances-of-chinas-enterprise-sector-15467",
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  "summary": "This paper examines the leverage, efficiency, and debt-repayment capacity of the Chinese enterprise sector using aggregate and firm level data.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Examines the leverage, efficiency, and debt-repayment capacity of the Chinese enterprise sector using aggregate and firm level data.\n- Uses the cash coverage of interest expense as a bridge between enterprise finances and banks' asset quality to develop insights on banking soundness.\n- Interest coverage analysis corroborates the high level of nonperforming loans in the financial system.\n- Concludes there is urgency in hardening budget constraints on state-owned enterprises and stemming the flow of new bad loans by accelerating ongoing structural reforms."
    },
    {
      "heading": "Key findings",
      "content": "- The cash coverage of interest expense provides a direct link between enterprise-level finances and bank asset quality.\n- Interest coverage analysis supports evidence of a high level of nonperforming loans in the financial system.\n- The situation underscores the need to harden budget constraints on state-owned enterprises (SOEs) and to stem the flow of new bad loans through structural reform."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Harden budget constraints on state-owned enterprises.\n- Accelerate ongoing structural reforms to stem the flow of new bad loans and improve banking soundness."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subjects: Bank credit; Economic sectors; Financial institutions; Financial sector; Money; Nonperforming loans; State equity participation; Stocks; Taxes\n- Keywords: Bank credit; Chinese corporate sector; Chinese economy; Chinese financial sector; coverage ratio; enterprise interest coverage; Financial sector; fixed asset; interest; negative equity; Nonperforming loans; nonviable SOEs; NPL ratio; public enterprise; ratio; State equity participation; Stocks; WP\n\n---\n\n Content in this bundle\n\n- wp01182\n  - wp01182 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp01182 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/an-attempt-to-profile-the-finances-of-chinas-enterprise-sector-15467"
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    "Authors: Cem Karacadag, Paul J. Heytens",
    "Published: November 1, 2001",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451859263.001",
    "Examines the leverage, efficiency, and debt-repayment capacity of the Chinese enterprise sector using aggregate and firm level data.",
    "Uses the cash coverage of interest expense as a bridge between enterprise finances and banks' asset quality to develop insights on banking soundness.",
    "Interest coverage analysis corroborates the high level of nonperforming loans in the financial system.",
    "Concludes there is urgency in hardening budget constraints on state-owned enterprises and stemming the flow of new bad loans by accelerating ongoing structural reforms.",
    "The cash coverage of interest expense provides a direct link between enterprise-level finances and bank asset quality.",
    "Interest coverage analysis supports evidence of a high level of nonperforming loans in the financial system.",
    "The situation underscores the need to harden budget constraints on state-owned enterprises (SOEs) and to stem the flow of new bad loans through structural reform.",
    "Harden budget constraints on state-owned enterprises.",
    "Accelerate ongoing structural reforms to stem the flow of new bad loans and improve banking soundness.",
    "Subjects: Bank credit; Economic sectors; Financial institutions; Financial sector; Money; Nonperforming loans; State equity participation; Stocks; Taxes",
    "Keywords: Bank credit; Chinese corporate sector; Chinese economy; Chinese financial sector; coverage ratio; enterprise interest coverage; Financial sector; fixed asset; interest; negative equity; Nonperforming loans; nonviable SOEs; NPL ratio; public enterprise; ratio; State equity participation; Stocks; WP",
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