Target setting and Allocative Inefficiency in Lending: Evidence from Two Chinese Banks

汪勇祥博士毕业于美国哥伦比亚大学商学院金融系，现为南加州大学Marshall 商学院金融学副教授（终身教职），也是上海交通大学高级金融学院（SAIF）的教授。研究领域包括实证公司金融、政治经济学、行为经济学、组织经济学等，对中国经济问题有着十分深入的研究，曾在经济、金融、会计、管理领域国际顶级期刊Journal of Political Economy、Review of Economic Studies、Review of Financial Studies、Journal of Financial Economics、Management Science、Journal of Accounting and Economics、Strategic Management Journal等发表论文。

We study the consequences of month-end lending incentives for Chinese bank managers. Using data from two banks, one state-owned and the other partially privatized, we show a clear increase in lending in the final days of each month, resulting from both more loan issuance and higher value per loan. We estimate that daily lending is 92 percent higher in the last 5 days of each month as a result of loan targets, with only a small amount plausibly attributable to shifting loans forward from the following month. End-of-month loans are 1.6 percentage points (12 percent) more likely to be classified as bad in the years following issuance relative to mid-month loans. Our work highlights the distortionary effects of target-setting on capital allocation, in a context in which such concerns have risen to particular prominence in recent years.