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

  • Oleksandr Talavera

    ()

    (School of Economics, University of East Anglia)

  • Lin Xiong

    (Robert Gordon University)

  • Xiong Xiong

    (University of Tianjin)

This paper studies the effects of social capital on access to bank financing. Based on a Chinese nationwide survey our analysis suggests that entrepreneurs who spend more time on social activities are more likely to obtain a loan from commercial banks. In addition, we find that membership of political parties is an important determinant of state bank financing. Finally, our data reveal some evidence of substitutability between various types of social capital. To get a loan from a specific type of bank, an entrepreneur should access the relevant social network. The results of our analysis are robust to a number of specification checks.

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Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series University of East Anglia Applied and Financial Economics Working Paper Series with number 019.

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Date of creation: 12 Oct 2010
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Handle: RePEc:uea:aepppr:2010_19
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