Regional Favoritism:Evidence From Credit Allocation Of China

Using officials' birthplace of central financial regulatory authorities in China and yuan loan of financial institutions,we confirm there is regional favoritism for credit allocation.The research shows more credits are assigned to birthplace of central financial regulator than native place or longest workplace.In addition,further evidence suggests that there isn't geographic expansion for regional favoritism.That is,birth province,other cities of birth province and neighboring cities of birth province gain no more credits.If credit loans are broken down to three types,industrial,agricultural,commercial loans,we find that industrial loans are more assigned than others.So,it indicates that extra credit of birthplace is used for economic growth.Overall,this paper contributes to literature of regional favoritism and suggests that there is intervention by government,central financial regulatory authorities,in financial resources.