Research On The Process Of Marketization, Political Connections And Enterprises'bank Loans

The research on political connections has become a hot issue in recent years. In our country, a developing nation which is transforming from the planned economy system to the market economy system, it's common that political connections exist in private enterprises. Political connections will certainly influence the development of private enterprises deeply. In this paper, we have focused private listed corporations from 2007 to 2009 as the research object, then studies how do political connections and different political connection modes affect private enterprises to get bank loans, from the standpoint of institutional constraints the private enterprise faced in the process of financing. The results show that political connections can help private enterprises to get bank loan as a whole. But the influence of different political connections modes has great difference."Government officials"connections are conducive to get bank loan, whereas"member of PC and CPPCC"connections have no significant effect on that. Therefore, it is the"government officials"connections of political connections which have a significant effect on getting bank loan. Besides, in this paper, a further study is conducted on the different effects of"government officials"connections under different marketization processes. The results suggest that, the lower the marketization index, the easier private enterprises with"government officials"connections get bank loans.Although political connections, as an informal institution, can help private enterprises alleviate institutional financial constraints, but studies have shown that political connections will increase high rent-seeking cost and affect the allocative efficiency in the process of resource allocation. For this reason, this paper suggests that we should go on promoting the market reform, and improving the market institutions, to provide favorable conditions for private enterprise to get bank loans.