Research On The Influence Of Political Connection On Private Enterprise Loans In China

In the past 20 years,China’s private economy has developed into a powerful economic driving force to keep pace with the state-owned economy.However,compared with the state-owned economy,private economy still has some shortcomings.In order to break through their own constraints,private enterprises usually seek better development by actively establishing political connections.Compared with state-owned enterprises,the threshold for banks to grant loans to private enterprises is generally higher.The specific performance is as follows:some banks put forward higher requirements for the quantity and quality of credit information of private enterprises compared with state-owned enterprises,the examination and approval line is more prudent in the credit decision-making process,and the guarantee conditions are more stringent.Based on the above background,this paper constructs the research framework.After excluding the listed companies of financial institutions,St,*ST and other special treatment listed enterprises and enterprises with incomplete data,1397 private enterprises are selected as the overall research sample.There are 958 and 439 samples of "choosing bank loan financing"and "not choosing bank loan financing"respectively.Firstly,the binary logit regression analysis of private enterprises’financing preference of "bank loan" is completed to observe the significant influencing factors of financing preference and its influence on financing preference.Then,we use the private enterprises of "choosing bank loan financing" to complete the research on the influence of political connection on enterprise bank loans.Finally,the robustness test is completed by sampling and substituting variables.The results show that:(1)There is a significant positive correlation between the financing preference of private enterprises and the proportion of state-owned shares,asset liability ratio,growth rate of total assets and daily return volatility,but a significant negative correlation with equity concentration.(2)The results show that the political relevance has a significant positive correlation with the bank loans of private enterprises;the enterprises with government official political connection tend to obtain long-term loan financing;if the financial development level of a certain region is low,the local enterprises will rely more on the government official type political connection if they want to obtain bank loan financing.(3)The robustness test shows that the research results are reliable.The advantage of bank loans brought by political ties to enterprises is caused by the imperfect financial development and system in China.Combined with the empirical conclusion,it is the most direct and fundamental way to improve the level of financial development and the degree of marketization.Only by perfecting and perfecting the system can we ensure the healthy and stable development of private enterprises,and the overall economy can run well,which is the fundamental policy.