Research On The Impact Of Political Association And Bank Contact To Bank Loans

Since reform and opening, private economy keeps growing, its contribution for the share of GDP has increased annually, also creates more jobs and the country’s tax revenue. However, financial support is necessary for the development of private enterprises, but it has been an obstacle for private enterprises.In this paper,2004-2011private listed companies are our samples, based on the theoretical analysis, find how political association, bank contact help private enterprise obtain bank loans. The results showed that when nonbank contact private enterprise as a sample of the regression model, the politics associated variable coefficient is negative, but is not statistically significant, indicating that without bank contact, the effects of political in promoting access bank loans does not exist. In contrast, in the absence of political association of private companies, bank contact can enable enterprises to get more bank loans. Indicating that, compared with political connections, bank contact may be more effective informal alternative mechanisms. In addition, we analyzed in different market process whether bank contact has different effects. We found that in the lower market process areas, bank contact help private enterprises to obtain more bank borrowings. Although association can help private enterprises obtain more bank loans, but some studies have shown that it will also cause high rent costs and affect whole society’s efficiency in resource allocation. Therefore, enterprises should rely on their own circumstances, compare the positive effect it has and also the possible negative effects. Maybe it is more important to promote market-oriented reforms, to improve the market system for private enterprises to obtain bank loans they need in a more market-oriented condition.This paper is organized as follows:The first part is an introduction. It is mainly about the research backgrounds, significance and possible innovations.The second part is the literature review and abroad. This part mainly define main concepts covered in this paper, collate and summarize the research about the relevant of political connection, bank contact, bank loans, and reviewed the status of existing studies.The third part is the theoretical analysis and research hypotheses. China is mainly combined with a special institutional environment, based on the relevant theoretical basis, this part mainly to find if political association and bank contact private affect listed company’s bank borrowings, then are the research hypotheses.The fourth part of the study design. On the basis of hypotheses, we introduce the study sample method for determining and selecting the sample, define and measure the dependent variable, the explanatory variables and control variables to select, and then build the model.The fifth part is empirical results and analysis. This part report empirical findings and the results of the empirical analysis, text how private listed company’s bank loans are affected by political association or bank contact, then to investigate whether the effects of such borrowing is stable.Part VI is the conclusion of the study and Suggestions. In this part, we report all the results, draw the conclusions of this paper and the corresponding recommendations and finally point out the inadequacies in this paper.