Political Connections and Corporate Borrowing: an Analysis on the Listed Real Estate Firms in China

Zan Yang (), Ying Fan (), Song Shi () and Jing Liao ()
Additional contact information
Zan Yang: Tsinghua University
Ying Fan: Tsinghua University
Song Shi: University of Technology Sydney
Jing Liao: Massey University

The Journal of Real Estate Finance and Economics, 2018, vol. 57, issue 3, No 1, 315-350

Abstract: Abstract This paper investigates the relationship between political connections and corporate borrowing behaviour using the listed real estate development firms in China from 2001 to 2014. Evidence from China is of particular importance due to China being the world’s largest emerging and transition economy. We find that the benefit of political connections is manifested in firms obtaining loans from state-controlled banks in the first instance, but that political influence diminishes over subsequent loan extensions. The performance based requirement prevents banks providing systemic favourable treatment to the connected real estate firms, especially after the Chinese banking system reform in 2006. The results provide fresh insight on the risks and benefits of political connections in the Chinese real estate market as it transitions from a centrally planned to a market based economy under on-going market oriented banking and political reforms.

Keywords: Political connections; Corporate borrowing; Listed real estate firms; China (search for similar items in EconPapers)
JEL-codes: G2 G3 H7 P2 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1007/s11146-017-9629-9 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:57:y:2018:i:3:d:10.1007_s11146-017-9629-9

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

DOI: 10.1007/s11146-017-9629-9

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().