WHICH COMPANIES FIND IT EASIER TO OBTAIN BANK LOANS? EVIDENCE FROM CHINA

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Abstract

The study investigates the determinants of bank loan financing of Chinese listed companies from 1996 to 2009. The empirical results suggest that the channels through which companies obtain bank loans are different. Companies controlled by the state can more easily obtain loans from state-owned commercial banks and policy banks, while privately controlled companies have significantly larger access to loans from foreign banks. The empirical results also show that political connectedness and institutional development are the significant determinants of the bank loan financing of private companies. If companies locate in an area with higher level of institutional development, the proportion of their loans from state-owned banks is smaller than that of companies locate in areas with lower level of institutional development.

Keywords: Bank Loan, Big Four, Foreign Banks, Political Connectedness, Institutional Development

How to cite this paper: Ruan, W., & Xiang, E. (2013). Which companies find it easier to obtain bank loans? Evidence from China. Corporate Ownership & Control, 10(3-3), 389-401. https://doi.org/10.22495/cocv10i3c3art5