Research On The Political Relations And The Efficiency Of Resource Allocation

In recent years, the research of political relationship has become hot between Chinese and foreignscholars. Under the background of economy transition in China, it is a widespread phenomenon that privateenterprises start to establish political relations, and this will have a profound impact on enterprises andcredit resources. Based on the sample of private enterprises of2009-2011listed in the Shanghai stockmarket and Shenzhen stock market, this article studies the impact of firm political relations on creditresource allocation efficiency. This article first studies the effect of political relations in enterprises on bankloans. Research results show that private enterprises with political relationship have easier access to creditloans. Then further explores the impact of business political relations on bank loans under differentmarket-oriented degrees. Results indicate that the lower the marketization degree, the easier access to bankloans. As we all know, in our country, bank credit resources are scarce. So finally, through the research ofprivate enterprise investment behavior which gets access to credit resources via the establishment ofpolitical relations. It shows that private enterprises with political relations are more prone to excessiveinvestment after obtaining bank loans. This will also lead to waste of credit resources and reduction ofcredit resources efficiency.While political relations can play a helping role for private enterprises’ financing difficulties, butfor the society as a whole, it has a very serious impact on credit resource allocation efficiency. Therefore,the article also raised the need for continued reform and opening up, regulating relationship betweengovernment and enterprises, and perfecting private enterprises management system, a sound financialsystem, ultimately improving the allocation efficiency of credit resources.