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Do property rights matter for bank loans? Evidence from China

Author

Listed:
  • Wu, Ying
  • Zhang, Yi
  • Li, Guangzi
  • Li, Fang

Abstract

This paper examines the impact of property rights protection on the cost of bank loans. Using a large sample of Chinese listed firms for the 2004-2010 period and the difference-in-difference method, we find that property rights protection has a negative effect on the cost of loans. The result is robust to a battery of sensitivity tests. Mechanism tests show that property rights protection reduces the cost of loans by alleviating information asymmetry. Our study provides new insight into the impact of property rights protection on the cost of loans.

Suggested Citation

  • Wu, Ying & Zhang, Yi & Li, Guangzi & Li, Fang, 2022. "Do property rights matter for bank loans? Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322002185
    DOI: 10.1016/j.frl.2022.102964
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    References listed on IDEAS

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    More about this item

    Keywords

    Property rights protection; Information asymmetry; Cost of loan; China;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights

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