[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v95y2024ics1059056024004647.html
   My bibliography  Save this article

Do personal political ties matter in SOEs’ access to bank credit? Evidence from China

Author

Listed:
  • Li, Yue
  • Bai, Min
Abstract
The role of personal political ties in State-owned enterprises (SOEs) remains under-investigated due to the difficulty of disentangling these ties from SOEs' inherent political connections. Leveraging China's anti-corruption campaign, this paper distinguishes between personal and inherent political ties within SOEs to explore the effect of personal political ties on access to bank credit. Using ordinary least squares and difference-in-difference models, we find that SOEs whose executives lose personal political ties receive significantly less bank credit, resulting in more severe financing constraints. In an attempt to compensate, these SOEs employ tax avoidance strategies, though these measures prove insufficient. Consequently, such SOEs reduce their investment in long-term assets while increasing investment in research and development. Furthermore, our study reveals that the negative impact of severed personal political ties on access to bank credit is more pronounced in SOEs with high state ownership. The reduction in personal political ties among SOEs following the anti-corruption campaign helps mitigate the misallocation of bank credit. Overall, this study identifies personal political ties as a key factor influencing SOEs' access to bank credit and provides new evidence on the effectiveness of China's anti-corruption campaign by categorizing SOEs' political ties into personal and inherent connections.

Suggested Citation

  • Li, Yue & Bai, Min, 2024. "Do personal political ties matter in SOEs’ access to bank credit? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:reveco:v:95:y:2024:i:c:s1059056024004647
    DOI: 10.1016/j.iref.2024.103472
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056024004647
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2024.103472?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Personal political tie; SOEs; Bank credit; Political connection; Anti-corruption;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:95:y:2024:i:c:s1059056024004647. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.