Differences in corporate saving rates in China: Ownership, monopoly, and financial development

- We investigate the determinants that lead to differences in saving rates of different enterprises in China.
- We explore the topic from the new perspectives of ownership type, monopoly status, and financial development.
- We find that only the size and the long-term solvency ability have direct impact on the saving rates.
- Monopolies have significantly higher saving rates than non-monopolies.
- Financial development reduces a firm's saving rate and the impact is independent on its ownership type and monopoly status.

Using the data of the listed non-financial companies from 2003 to 2012, this paper conducts a firm-level empirical analysis to reveal the determinants that lead to differences in saving rates of different enterprises in China. Particularly, we explore the discrepancies in the Chinese enterprises' saving rates from the new perspectives of ownership type, monopoly status, and financial development. We find that only some financial indicators of a firm, including the size and the long-term solvency ability, have direct impact on its saving rate. Besides, the difference in the saving rates between private firms and state-owned firms is insignificant while monopolies have higher saving rates than non-monopolies. Most importantly, financial development generally reduces a firm's saving rate and the impact is independent on its ownership type and monopoly status. Moreover, financial development decreases the influence of a firm's short-term solvency and profitability on its saving rate.