Political Ties And Listed SMEs’ Bank Credit Financing

This study uses725Chinese listed companies from2005to2010as samples, andpursues an empirical study on the effects of the firm’s political ties with the bank creditfinancing. The findings from this study indicate that the political ties of Chinese firms haveexpedient effect mechanism on the bank credit financing. Further considering theenvironmental factors, this study also indicates that the direct political ties lead to higherbank credit financing, when the degree of the government intervention is lower and thelevel of financial development is higher. In other works, administrative governance has noobvious role in promoting the bank credit financing, when the level of financialdevelopment is low. But when the level of financial development is high, administrativegovernance has additional effects on economic governance. According to the InstitutionalCompetition, when the level of financial development is low, the administrative governanceis in a monopoly position. However, with the level of financial development improving, thesubstitution of market governance, administrative governance produces competitive effect.As well as in crisis, the administrative governance highlights the positive role.