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The impact of financial constraint difference on capital accumulation of private enterprises in China——taking the industry enterprises as example

Sun Zhuo

In China, private enterprises have been facing with more serious finance constraint than state-owned enterprises since reform and opening up. This paper focuses on proving the private enterprises are more productive than state-owned ones in capital output efficiency by calculating two sectors capital returns. Then this paper estimates the impact of financial constraint difference on capital accumulation of private sector by using the data gathered from 2001 to 2011. The results show that: (1) private sector’s capital return rate is higher than state-owned sector; (2) as financial constraint difference increases 1 unit, private firms’ capital stock will be restricted 1.19 units. Finally, this paper gives some explanations and suggestions on the basis of above results