Ownership, Institutional Environment And Corporate Lending

The Private Economy has made considerable progress since the Economic Reform in 1978, and it's proportion in China's economic is growing. However, the lending funds the private firms obtained are smaller than that of the state-owned enterprises. Generally the private enterprises face the difficulty in financing.In this context, this paper focuses on the internal relations of ownership, institutional environment and corporate borrowing. Based on the literature review, this paper presents three research questions. Firstly, compared to the state-owned enterprises, will the long-term bank loan ratio of private enterprise be different? Secondly, given some provinces that have better institutional environment, will the long-term bank loan ratio of the private enterprise be greater? Thirdly, whether the private enterprises acquire funds through the way of trade credit when they face financing dilemma.In order to solve the three research questions above, this paper proposes a series of hypotheses. Then, through the methods of descriptive statistics, T test and multiple regression analysis, this paper does empirical research for the hypotheses proposed with the 2000-2006 industrial enterprises panel database. The main conclusions are presented in the following three aspects.Firstly, after controlling the enterprise's size, there is also significant difference between the state-owned enterprises and the private enterprises, in other words, the long-term bank loan ratio of private enterprises is significantly lower than of the state-owned enterprises.Secondly, when some provinces that have better institutional environment, the long-term bank loan ratio of the private enterprise in that places will be greater.Thirdly, there is significant difference between the state-owned enterprises and the private enterprises in the accounts payable ratio, in other words, the private enterprises use the way of trade credit to finance.