How Political Connections And Institutional Background Affect Bank Loan

With the deepening of reform and opening up, the private enterprises are developing rapidly and become an important part of China’s economy. However, due to the market-based reform of our country is not perfect, lack of system, the government still controls the majority of resources,so in our country state-owned and private binary economic structure, private enterprises obviously in a relatively weak position. In order to promote its own development, the private enterprise actively establishes the political relationship to seek for the better environment, and the acquisition bank loan is one of the most important motives for the establishment of the political relationship of the private enterprise.This paper will study whether political relations act as an informal institution to help private enterprises get bank loans. First of all, this paper reviews the political relation definition, measurement and Research on bank loans of domestic and foreign literature, find the gap and innovations of the study, namely business environment different the influence political relationship loans to private enterprises difference. Then to China from 2008 to 2013 in Shanghai and Shenzhen Stock Exchange listed all the private enterprises as samples, test the political relations of private enterprises long, effects of short-term bank loans, and this effect under the different operating environment differences. The results show that:the number of private listing corporations having political relationship has been over 25%; enterprises existing government officials political relations can obtain long-term loan from the bank more easily; in the areas of low level of financial development and high degree of government plunder, the loan effect is more obvious.