This study examines the relations between leverage and investment in China's listed firms, where corporate debt is principally provided by state-owned banks. We obtain three major findings. First, there is a negative relation between leverage and investment. Second, the negative relation between...

This paper provides new evidence on the supply side effects on corporate capital structure in China. We find that bank-dependent firms, which are mainly large and state-owned companies in China, increase (decrease) their leverage ratios if loan supplies increase (decrease) relative to the case...