Property rights protection and access to bank loans

Evidence from private enterprises in China* 

Authors


  • * 

    The research for this paper has been funded by the University of Hong Kong and the Hong Kong Institute of Economics and Business Strategy. We thank Julan Du, Yingyi Qian (editor), and two anonymous referees for their very helpful comments and suggestions.

Abstract

Poor protection of private property has limited the access to bank loans by private enterprises in developing and transition economies. Under those circumstances, private entrepreneurs have resorted to various ways of enhancing the de facto protection of private property. Using a dataset of 3,073 private enterprises in China, this paper empirically investigates the impact of political participation and philanthropic activities – informal substitutes for the lack of formal protection of private property – on the access to bank loans.

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