Anti-Corruption,Political Connections And Corporate Credit Loans

The credit market plays an important role in China's economic development and resource allocation.Due to China's current special institutional background,banks have credit discrimination in the process of lending,and private companies are subject to financing constraints.In order to ease the financing constraints,private companies will actively seek political connections.Political connections are an alternative mechanism to help private companies obtain bank support.However,excessive reliance on political linkages to ease financing constraints will overlook the development of regional financial markets,leading to low efficiency of fund allocation,and unfair competition tends to breed corruption.Since the 18 th National Congress,the government has carried out anti-corruption campaigns on a large scale.Once politically related officials are prosecuted for corruption,the good links between the relevant companies and the government officials will be cut off by anti-corruption.Anti-corruption not only increases the cost of setting up rents by officials,but also increases the cost of rent-seeking companies,and weakens the incentives for political connections.Under such circumstances,in order to adapt to changes in the external environment,enterprises will inevitably adjust their own business decisions,and banks will consider more market principles and economic principles when making credit decisions.In the eastern region,there are many corporate financing channels.When anti-corruption increases the cost of establishing political connections,enterprises can adjust financing methods at a lower cost.However,in non-Eastern regions,corporate financing channels are limited and their dependence on political linkages is strong.Anti-corruption has a limited role in weakening political linkage incentives.In different regions,there may be differences in the impact of anti-corruption on political connections and corporate credit borrowing.Taking the strong anti-corruption policy of the country since the 18 th National Congress as the background,this article selects all A-share private listed companies from 2010 to 2016 as the research object,first analyzes the relationship between political connections and the proportion of credit loans in corporate bank loans,and then analyzes anti-corruption policies.As for the influence of political connections and corporate credit borrowing,it is finally analyzed whether the impact of anti-corruption on political relations and corporate credit borrowing is different due to different regions.The study found that compared with non-politicized private companies,the establishment of politically-linked private companies received more credit loans.The impact of the anti-corruption policy has caused politically-linked private enterprises to lose their protective barriers.Banks expect that such enterprises will not be able to repay on time and increase the risk of sustainable operations.Banks will adjust credit decisions and reduce their willingness to lend.The credit borrowed by the company is reduced.That is,anti-corruption weakens the positive correlation between political connections and corporate credit.Further studies found that compared to non-Eastern regions,the anti-corruption effect on the political relationship and corporate credit borrowing weakened more significantly in the eastern region.The empirical results show that anti-corruption policies have had an impact on the economic activities of micro-enterprises.The research in this paper enriches the literature on the factors affecting corporate credit financing.It also provides some inspiration for further improving anti-corruption policies and optimizing market operations.