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Social Capital and Access to Bank Financing: The Case of Chinese Entrepreneurs

Author

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  • Oleksandr Talavera
  • Lin Xiong
  • Xiong Xiong

Abstract

This paper presents the results of a study of the effects of social capital on access to bank financing. Based on a Chinese nationwide survey, our analysis suggests that entrepreneurs who contribute to charities are more likely to be successful in loan applications. In addition, we find that political party membership is an important determinant of state-owned bank financing, whereas time spent on social activities increases the probability of obtaining loans from commercial banks. Therefore, our data provide some evidence for substitutability between various types of social capital. To obtain a loan from a specific type of bank, an entrepreneur should access the relevant social network.

Suggested Citation

  • Oleksandr Talavera & Lin Xiong & Xiong Xiong, 2012. "Social Capital and Access to Bank Financing: The Case of Chinese Entrepreneurs," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(1), pages 55-69, January.
  • Handle: RePEc:mes:emfitr:v:48:y:2012:i:1:p:55-69
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    References listed on IDEAS

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    1. McGrath, Rita Gunther & MacMillan, Ian C. & Yang, Elena Ai-Yuan & Tsai, William, 1992. "Does culture endure, or is it malleable? Issues for entrepreneurial economic development," Journal of Business Venturing, Elsevier, vol. 7(6), pages 441-458, November.
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    Citations

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    Cited by:

    1. Mustafa Caglayan & Oleksandr Talavera & Lin Xiong & Jing Zhang, 2019. "What does not kill us makes us stronger: the story of repetitive consumer loan applications," Discussion Papers 19-01, Department of Economics, University of Birmingham.
    2. Dr. Yen, Shang-Yung & Fan, Song-Chin, 2014. "An Exploration on the Business Model of Social Enterprises Owned By Chinese Entrepreneurs in Taiwan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(10), pages 1275-1289, October.
    3. Pham, Tho & Talavera, Oleksandr, 2018. "Discrimination, Social Capital, and Financial Constraints: The Case of Viet Nam," World Development, Elsevier, vol. 102(C), pages 228-242.
    4. Hong Sun & Valentina Hartarska & Lezhu Zhang & Denis Nadolnyak, 2018. "The Influence of Social Capital on Farm Household’s Borrowing Behavior in Rural China," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-20, November.
    5. Pham, Tho & Talavera, Oleksandr, 2018. "Discrimination, Social Capital, and Financial Constraints: The Case of Viet Nam," World Development, Elsevier, vol. 102(C), pages 228-242.
    6. Reindolf Yao Nani Adzido & Emmanuel Kwame Ahiave & Victor Yao Kamasah & Vivian Akoto & Onesimus Kwashie Dorkpah, 2016. "Assessing Financial Openness and Access to Credit Facilities: The Case of Banks in Ho, Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(3), pages 47-57, July.
    7. Oleksandr Talavera & Charlie Weir & Lin Xiong, 2017. "Time Allocation and Performance: The Case of Chinese Entrepreneurs," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(1), pages 27-51, January.
    8. Christina Nicolas & Amine Tarazi, 2019. "Disentangling the effect of Trust on Bank Lending," Working Papers hal-02384495, HAL.
    9. Kung'U, Gabriel Kamau, 2011. "Factors influencing SMEs access to finance: A case study of Westland Division,Kenya," MPRA Paper 66633, University Library of Munich, Germany, revised 2014.
    10. Phuoc Vu Ha & Michael Frömmel, 2019. "Social Capital, Credit Choices And Growth In Vietnamese Household Businesses," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-19, September.
    11. Liang Zhang & Tie-nan Wang & Hung-Gay Fung, 2014. "Market Reaction to Corporate Social Responsibility Announcements: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(2), pages 81-101, March.

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    More about this item

    Keywords

    China; entrepreneurs; social capital;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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