Research On The Influence Of Political Connections On China's Private Enterprise Loans

With the continuous development of China's economy and the reform of state-owned enterprises,China's private enterprises play an increasingly important role in economic development.As a result of the development of socialist economy,the economy of the economy is an important force that has long promoted economic development.It is an important component of the current supply-side reform and high-quality economic development.The link between the government and enterprises is also an inevitable important issue in our reform and development."Political connection" is one of the concrete manifestations of the relationship between the government and enterprises.We all know that although private enterprises play a pivotal role in China's economic development,under the existing institutional mechanisms,resources are still inevitably tilted toward state-owned enterprises.For this reason,many private enterprises try to establish political ties to gain more advantages,such as more favorable tax policies,better land resources,and more importantly,in terms of credit financing,private enterprises are subject to their own restrictions,such as The overall scale is small,and the mortgage able assets are less;on the other hand,due to many external restrictions,it is difficult for private enterprises to treat the state-owned enterprises equally because of the above internal and external reasons,and financing is more difficult.Not only small and micro enterprises,but also large and medium-sized private enterprises reflect the strong demand for external funds,relying on bank loans and actual financing difficulties.However,compared with private enterprises without background,private enterprises with political connections can relatively alleviate this phenomenon.Since the reform and opening up,China has gradually changed from a planned economy to a more open market economy.In this process,because of different land resources,location advantages,and historical developments between different regions,there will be different ways of economic development.The way the economy develops not only affects the speed of economic development,but also affects the degree of financial development.In recent years,while the economy has continued to grow,the level of financial development in different regions of China has shown greater differences.The main impact of financial development on corporate bank loans is that financial development will alleviate information asymmetry,and will also enable enterprises to have more choices in financing methods,making financing costs more reasonable.This paper takes China's private listed companies as a research sample to investigate whether private enterprises in China have different loans due to political relations during loan financing,and whether such differential loans are related to thedegree of financial development.First,it is tested whether the political connection helps private enterprises to obtain bank loans.Finally,the above results are used to further discuss whether the degree of financial development in different regions brings different differential loans,that is,whether financial development can alleviate the effect.