Business Friendliness: A Double-Edged Sword

Mengyin Li, Phillip Phan and Xian Sun
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Mengyin Li: Business School, Renmin University of China, Beijing 100872, China
Xian Sun: Carey Business School, Johns Hopkins University, Baltimore, MD 21202, USA

Sustainability, 2021, vol. 13, issue 4, 1-22

Abstract: In this paper, we test the hypothesis that business-friendly local-government policies combined with weak legal institutions lead to lower economic welfare in the form of greater fraud activity. Using data of almost 3000 failed peer-to-peer (P2P) lending platforms in China, labeled as “runaways”, we find that they are more prevalent in provinces with business-friendly policies with weak law-enforcement regimes.

Keywords: business friendliness; law enforcement; informal institutions; P2Ps; sustainable economic growth; emerging markets (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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