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Anti-corruption intensity and loan contracting: Evidence from non-state owned firms in China

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  • Li, Guangzi
  • Chan, Kam C.

Abstract

We examine the effect of China’ s anti-corruption intensity on loan contracting efficiency. The findings suggest that conditional on the political connection (total factor productivity) of a firm, the anti-corruption intensity in the province in which a firm is located leads to less (more) favorable loan contracting terms. Additional analysis shows that the effect of anti-corruption intensity on loan contracting terms is stronger for firms with higher financing constraints and weaker external legal environments. We further find that higher anti-corruption intensity is related to lower credit growth at the macro level.

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  • Li, Guangzi & Chan, Kam C., 2021. "Anti-corruption intensity and loan contracting: Evidence from non-state owned firms in China," Emerging Markets Review, Elsevier, vol. 49(C).
  • Handle: RePEc:eee:ememar:v:49:y:2021:i:c:s1566014121000261
    DOI: 10.1016/j.ememar.2021.100818
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    1. Wu, Kai & Liu, Jiming, 2022. "Purifying political ecology: How anti-corruption campaign affects capital structure decisions?," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).

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