Chung, Y. H., and Zeng, Y. L. 2023. The Relationship between Corporate Political Donations and Government-Controlled Banks’ Loan Rates: Evidence from Presidential Elections of Taiwan. NTU Management Review, 33 (2): 169-234. https://doi.org/10.6226/NTUMR.202308_33(2).0005
Yu-Hsuan Chung, Department of Accounting and Information Technology, National Chung Cheng University
Ying-Ling Zeng, BankTaiwan Life Insurance
Abstract
Firms make political donations to establish political connections. This study investigates the effect of firms’ presidential campaign donations on government-controlled bank loan rates in Taiwan by examining listed firms’ loan contracts in post-presidential election periods. The results reveal that firms that make political donations benefit from banks offering lower loan interest rates. Furthermore, this study finds that firms that donate to the presidential election winner obtain preferential treatment with lower loan rates. The findings show that firms’ ability to establish political connections through campaign donations helps shape an advantage contract for government-controlled bank loans.
Keywords
political donationsgovernment-controlled banks’loansloan rates