Bank Loans And Firm Performance: A Study On China's Public Listed Companies

Using the data of China's public listed companies, the relationship between bank loans and corporate governance is analyzed in this paper. It is found that with increasing the sizes of bank loans, corporate's ROA decreases. The increasing sizes of short-term bank loans result even lower ROA than the medium or long-term bank loans. These phenomena remain unchanged from 2003 to 2005. Therefore, by the end of 2005, the formerly state-owned commercial banks'ownership diversification reform had not succeeded in fundamentally dealing with the problem of failed governance role of debt.