Relationships between Political Connections, Corporate Social Responsibility and Cost of Long-Term Bank Loan

• Main Authors: Cheng-Hao Li, 李承昊
• Other Authors: Chia-Fen, Tsai
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/hdecdk

碩士 === 國立中山大學 === 金融創新產業碩士專班 === 106 === This study takes Taiwan listed companies as samples to investigate the impact of political connections and corporate social responsibility (CSR) performance on Cost of long-term bank loan during the period from 2006 to 2016. The main findings are as follows: First, the study finds that when directors or managers have political related experience, the company may have higher cost of bank loan because of the high financial risks, low transparency of information, poor corporate governance, and political uncertainty triggering banks to ask higher risk premiums. Secondly, the impact of political connections on the borrowing costs of public banks is more significant than that of private banks. The reason is that political-related companies are less likely to obtain loans because of their high default risk, so they will try to get loans from public banks, which have stronger political background, via political connections. Since undertaking lots of high-risk business, public banks will require higher borrowing rates as protections of claims. Third, companies with better CSR performance, will have lower credit risk and cost of bank loan, because of the higher transparency of information and certification by third-party institutions. Finally, this study further finds that political-related companies with better CSR performance are more likely to gain the trust from banks. Therefore, the higher cost of bank loan that was originally affected by political connections can be reduced significantly.