It is a widely circulated myth that Chinese family firms rely exclusively on kinship ties and network capital to finance their domestic and international operations. In this empirical paper, I argue that large Chinese family firms are increasingly engaging with financial markets on a global scale. In order to finance their transnational business activities, these firms require financial services from banks beyond their domestic economies, resulting in a growing number and geographical spread of their principal banks. Second, I contend that as these Chinese family firms are diversifying their principal banks beyond a narrow confinement to other Chinese family-owned banks and financial institutions, their corporate performance will improve over time. Drawing upon time-series data (1996, 1998, and 2001) on over 150 Chinese family firms listed on the Singapore Exchange, I discuss both the geographical origins of their principal banks and the impact of the selection of these banks on their corporate performance before and after the 1997/1998 Asian economic crisis. I also show whether there is a relationship between the use of principal banks by these Chinese family firms and their shareholding structures
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