Chinese companies slow to adjust debt levels, impacting growth and stability.
The study looked at what factors influence how much debt Chinese companies use. They found that bigger companies with more assets tend to have more debt, while profitable companies with growth potential have less debt. Chinese firms adjust their debt levels slowly over time, and firms adjust faster if they are far from their desired debt level. Overall, Chinese companies tend to take a long time to reach their ideal debt levels, and this process is even slower for companies that started before 1993.