Nature of property right and the motives for holding cash: Empirical evidence from Chinese listed companies

Earlier studies have reaffirmed the pivotal role played by the private sectors in China's development, so the growth of private enterprises deserves more attention. This paper carries out a series of empirical studies based on the motives for holding cash. It is found that private enterprises were forced to maintain a high level of cash holdings to deal with financing constraints, while SOEs accumulate cash proactively for larger financial flexibility. In such context, credit discrimination remains an urgent problem pending Chinese financial system reform solutions.