Do Political Connections of Private Enterprises Impact Bank Loan Pricing

Gong-rong Chen (), Qi-shan Li () and Cong-min Ding ()
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Gong-rong Chen: Hunan University
Qi-shan Li: Hunan University
Cong-min Ding: Hunan University

Chapter Chapter 65 in The 19th International Conference on Industrial Engineering and Engineering Management, 2013, pp 693-701 from Springer

Abstract: 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.

Keywords: Bank loan rates; Credit discrimination; Debt financing costs; Political connections (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-37270-4_65

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DOI: 10.1007/978-3-642-37270-4_65

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