Original scientific paper
https://doi.org/10.1080/1331677X.2020.1768427
The impact of corruption on firms’ access to bank loans: evidence from China
Peisen Liu
Houjian Li
Hua Gou
Abstract
Current theories cannot explain the coexistence of China’s
40 years of rapid economic growth and its imperfect financial system,
insufficient investor protection, and government intervention.
This study empirically tests hypotheses regarding the effects
of corruption on firms’ access to bank loans using econometric
models based on survey data of 2,848 enterprises in China collected
by the World Bank. The results show an inverted U-shaped
relationship between corruption and firms’ access to bank loans:
a low level of corruption increases firms’ access to bank loans,
whereas a high level of corruption hinders firms from obtaining
bank loans. Mild corruption may be a suboptimal choice for firms
seeking bank loans, and bank funds allocation based on corruption
can achieve Pareto optimality among firms. Moreover, government
guarantees are conducive to firms’ access to financing
and the link between corruption and firms’ access to bank loans
can be explained by the role of government guarantees. The
improvement of institutional quality is positively associated with
firms’ access to bank loans and weakens the effects of corruption
on firms’ external financing. This study thus sheds light on the
real effects of corruption and the determinants of firms’ access to
bank loans in developing countries.
Keywords
Corruption; bribery; bank loan; government guarantee; institutional quality
Hrčak ID:
254586
URI
Publication date:
9.2.2021.
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