Abstract:
Based on the survey data of China’s enterprises, this paper studies the association between financial constraints, the level of financial development and firms’ employment growth. Using the IV method to deal with the endogenous problem, theresults show that financing constraints on employment practice of companies have a significantly negative impact. In ceteris paribus, the difficulty of financing increases by one unit will reduce employment growth rate of full-time employees by 3.1%. In 2003, taking the credit crunch to control the economy by the Peole's Bank of China, as a natural experiment, we found that tight monetary policy has a great negative impact on the demand of enterprise employment; while the urban financial development will ease financing constraints of entrepreneurs, and then promote significantly for enterprises’ employment.
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