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Business Friendliness: A Double-Edged Sword

Author

Listed:
  • Mengyin Li

    (Business School, Renmin University of China, Beijing 100872, China)

  • Phillip H. Phan

    (Carey Business School, Johns Hopkins University, Baltimore, MD 21202, USA)

  • Xian Sun

    (Carey Business School, Johns Hopkins University, Baltimore, MD 21202, USA)

Abstract

In this paper, we test the hypothesis that business-friendly local-government policies combined with weak legal institutions lead to lower economic welfare in the form of greater fraud activity. Using data of almost 3000 failed peer-to-peer (P2P) lending platforms in China, labeled as “runaways”, we find that they are more prevalent in provinces with business-friendly policies with weak law-enforcement regimes.

Suggested Citation

  • Mengyin Li & Phillip H. Phan & Xian Sun, 2021. "Business Friendliness: A Double-Edged Sword," Sustainability, MDPI, vol. 13(4), pages 1-22, February.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:4:p:1819-:d:495495
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