Political Capital, Political Environment and Bank Lending: An Investigation of Chinese Private Entrepreneurial Firms

46 Pages Posted: 2 May 2014

See all articles by Yiping Wu

Yiping Wu

Shanghai University of Finance and Economics

Oliver M. Rui

China Europe International Business School (CEIBS)

Douglas J. Cumming

Florida Atlantic University

Date Written: May 1, 2014

Abstract

Using the theories of the political marketplace and political instability, we examine the effect of political capital on firms’ access to bank loans in relation to the political environment. In particular, we use political capital inequality and political instability to characterize the political environment. Using a nationwide survey of private firms in 2010, we find that private firms have more difficulty in gaining access to bank lending as the degree of political capital inequality increases. Furthermore, political capital exerts a positive effect on access to bank loans only when political capital inequality and instability are above certain thresholds.

Keywords: Political Capital; Political Capital Inequality; Political Instability; Bank Lending; China

JEL Classification: G21, P26

Suggested Citation

Wu, Yiping and Rui, Oliver M. and Cumming, Douglas J., Political Capital, Political Environment and Bank Lending: An Investigation of Chinese Private Entrepreneurial Firms (May 1, 2014). Available at SSRN: https://ssrn.com/abstract=2431663 or http://dx.doi.org/10.2139/ssrn.2431663

Yiping Wu (Contact Author)

Shanghai University of Finance and Economics ( email )

Shanghai
China

HOME PAGE: http://spea.shufe.edu.cn/jsp/sh_edu/browser/2.jsp?name=2013000180&identity=80

Oliver M. Rui

China Europe International Business School (CEIBS) ( email )

699 Hong Feng Road
Pudong
Shanghai 201206
China
86-21-28905618 (Phone)
86-21-28905620 (Fax)

HOME PAGE: http://https://www.ceibs.edu/rui-oliver

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

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