Research On The Influence Of Private Enterprises' Political Connections On The Cost Of Debt Financing From The Perspective Of Industrial Policy

In Chinese transitional economies,political connections have a profound effect on relieving private companies' debt financing constraints.Due to the characteristics of the property rights of private enterprises,the disadvantaged position of the institutions and legal environment,the difficulty of debt financing is not only related to the information asymmetry of the external financing market,but also related to the national institutional environment.Therefore,private enterprises will adopt a series of measures to establish a good relationship with the government.In recent years,some scholars' studies have also shown that the phenomenon of private enterprises establishing political connections has become widespread.Establishing a close political relationship with the government can help private companies obtain better debt financing conditions,such as lower bank loan costs,longer loan terms,and larger loan sizes,thereby alleviating the financing constraints of private enterprises and improving the financing status.In addition to informal systems such as political links,formal systems(such as national industrial policies)can also play a guiding role in optimizing resource allocation and adjusting industrial structure.If the country's industrial policies strongly support the development of private enterprises,then the difficulties faced by private enterprises in funding shortages and high capital costs will easily be solved.Therefore,industrial policies can ease the debt financing constraints of private enterprises,help private enterprises obtain preferential loan resources,and support the sustained and healthy development of private enterprises.The private companies' A-share listed on the Shanghai Stock Exchange during the12 th Five-Year Plan are selected as the sample,and the influence of political connections on corporate debt financing constraints,especially debt financing costs,are mainly analyzed.First,it verified the negative correlation between the establishment of political associations and the cost of debt financing by private enterprises.Second,from the perspective of industrial policy,it contrasted and analyzed the debt financing costs of political associations to private enterprises under the condition of industrial policy support.The empirical results show that in the transitional economy in China,the implicitguarantee of political connections established by private enterprises can significantly reduce the cost of debt financing for private enterprises,and reflect the resource effects and information effects of political connections.From an industrial policy perspective,the negative correlation between political linkages and debt financing costs is stronger among companies that do not belong to industry policy support industries than those that are industrial policy support industries.Therefore,it is very important to strengthen the protection of private industry by national industrial policies and to appropriately exert the resource effects and information effects of political connections to alleviate the financing constraints of private enterprises.However,promoting the reform of the financial system,improving the financial market,and creating a more fair and market-oriented economic environment for private enterprises is the key to promoting the country's economic development and the sustained and healthy growth of private enterprises.