Political Relationships Of Private Enterprise Financing Constraints

As one of the emerging economies, the development of China’s economy is still at the stage of transition,the securities market is immature and the legal system is imperfect which make private enterprises in China are facing different kinds of dilemmas including violations of the enterprises’ property rights, government policy discrimination, limited market access and infringement of minority investors’ benefit and so on, what’s more, the financing predicament is becoming a bottleneck problem of the development of private enterprises. Therefore, private enterprises generally take the advantages of political relationships, financial relationships etc. to break through the financing dilemma and seek for the lasting and stable development.Based on the data from the commercial and industrial association of China,the contribution to GDP made by private enterprises is about 1% at the early stage of reform and opening up to 70%, in 2013 which also increased fiscal tax and fixed asset investment, improved urban employment and product development at the same time. In a word, with the rapid development of our country’s economy, the social status of private enterprises have been improved rapidly and become an important part of China’s economic development. However, it is prevalent that private enterprises are facing the financing dilemma which has become the biggest obstacle to increase the enterprises efficiency. Therefore, the primary problem of promoting the sustainable development of private enterprises is to solve the financing dilemma.On the basis of the theory of political relationships and credit financing, we card both domestic and foreign literature, combine theoretical analysis and empirical test, from the perspective of three financing discrimination, financing deadline, financing costs and supported by related data at the same time to make an analysis of the background of private enterprises in our country how to establish political associations and the influences of political relationships on private enterprise’ credit financing. In this paper, empirical studies are based on the data from the private listed companies on the shanghai stock exchange during 2008 to 2013,then we make the descriptive statistical analysis, Pearson correlation analysis and multivariate statistical regression analysis, and draw with the following results:(1) it is easier for private enterprises establishing political relationships to get an access to obtain large-scale financing funds.(2) private enterprises with the establishment of political association can get longer financing period;(3) political association can help private enterprises to obtain financing with the lower cost.The innovations of this paper lies in these aspects: firstly, this paper systematically studied the relationship between political association and private enterprises’ credit financing. In the domestic and international research literatures, scholars generally focus on private enterprises with the establishment of political association are more likely to get credit financing, but it is not comprehensive and specific to research on the convenience of obtaining financing; secondly, this article conducts the research on the private enterprises’ financing cost from multiple perspectives. Existing literatures about the private enterprises’ cost of credit financing associated with political relationships less, in the course of the study of this paper, we focused on the influence of political association on private enterprises’ financing cost to make up for the shortage of existing research to a certain extent.