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Do Political Connections of Private Enterprises Impact Bank Loan Pricing

In: The 19th International Conference on Industrial Engineering and Engineering Management

Author

Listed:
  • Gong-rong Chen

    (Hunan University)

  • Qi-shan Li

    (Hunan University)

  • Cong-min Ding

    (Hunan University)

Abstract

Restricted by the factors of institutional system and information asymmetry, private firms are confronted with serious credit discrimination in the bank financing. Based on extant literatures studying the loan effect of political connections, this paper investigates the correlations between the political connections of private enterprises and bank loan pricing. The result of this paper indicates that political connections of private firms have the debt cost effect, thereby helping private firms finance with relatively low bank loan rates, which provides the new proof of the impact of political relationship on the credit discrimination that private corporates encounter from the bank loan pricing perspective for the extant literatures.

Suggested Citation

  • Gong-rong Chen & Qi-shan Li & Cong-min Ding, 2013. "Do Political Connections of Private Enterprises Impact Bank Loan Pricing," Springer Books, in: Ershi Qi & Jiang Shen & Runliang Dou (ed.), The 19th International Conference on Industrial Engineering and Engineering Management, edition 127, chapter 0, pages 693-701, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-37270-4_65
    DOI: 10.1007/978-3-642-37270-4_65
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