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Government-Enterprise Relation, Financing Plight and Enterprise Growth: Empirical Evidence from World Bank on Chinese Firms

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  • Zijian Li

    (Shanghai University of Finance and Economics, Shanghai, China)

Abstract

Theoretically, the influence of government-enterprise relation on enterprise growth is divided into lubricating effect and friction effect. However, the government-enterprise relation has been discussed in only a few studies from the perspectives of enterprise financing and willingness. No unified conclusions have been formed regarding the influential consequences of government-enterprise relation. To investigate the influence mechanism of government-enterprise relation on enterprise growth, World Bank Survey of Chinese Enterprises data in 2012 was used in this study to empirically verify how the government-enterprise relation influenced enterprise growth, the mediating effect of financing plight via mediating effect models. The differentiated influences of government-enterprise relation on enterprise growth were explored through the grouping test of corporate ownership and scale. Moreover, the causal relation between government-enterprise relation and enterprise growth (the former facilitated the latter) was further tested and recognized through the instrumental variable method. Results show that the government-enterprise relation is capable of boosting enterprise growth by mitigating the financing plight faced by enterprises, thus proving the lubricating effect of government-enterprise relation. The findings still hold after the endogeneity problem is weakened by using the instrumental variable method and after the robustness test. In the grouping test, a good government-enterprise relation can promote the growth of private enterprises and small-sized enterprises by remitting the financing plight they face. The conclusions obtained from this study can provide a beneficial reference for expanding enterprise financing channels and constructing a complete financial system, and lay a theoretical foundation for probing the influences of government-enterprise relation.

Suggested Citation

  • Zijian Li, 2022. "Government-Enterprise Relation, Financing Plight and Enterprise Growth: Empirical Evidence from World Bank on Chinese Firms," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(59), pages 214-214.
    • Handle: RePEc:aes:amfeco:v:24:y:2022:i:59:p:214
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    More about this item

    Keywords

    government-enterprise relation; financing plight; enterprise growth; mediating effect model.;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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