The relationship between political relations and loan amount

[[abstract]]This study focused on political relations and loan amounts. Political relations have long existed worldwide and refer to the interactive process between politics and economic markets. A considerable number of individuals managing political relations obtain particularly large loans from financial institutions through political power. Under the administration of various political parties, numerous enterprises obtain political and economic privileges through political investments and manipulate political connections to successfully obtain government contracts or allocated funds from financial institutions. Therefore, this study investigated the correlation between political relations and loan amounts. Listed companies on the Taiwan Stock Exchange between 1996 and 2012 were sampled in this study to investigate whether the presence of political relations or tendencies in enterprises increases the bank loan amount. The empirical results indicated that political relations did not assist enterprises in obtaining short- or long-term loans; the influence of political tendencies on the ability of enterprises to obtain loans was also nonsignificant. Thus, enterprises with large size and high returns on their total assets and credit rating tend to easily obtain bank loans. In addition, regarding political relations under the administration of the Kuomintang, enterprises that supported the Kuomintang were less likely to obtain short-term loans and more likely to obtain long-term loans compared with other enterprises. Regarding party relations during the same period, enterprises that supported the Kuomintang were less likely to obtain short-term, long-term, or composite loans compared with other enterprises. Furthermore, regarding political relations under the administration of the Democratic Progressive Party, enterprises that supported the Democratic Progressive Party were more likely to obtain short-term loans compared with other enterprises. Regarding party relations during the same period, enterprises that supported the Democratic Progressive Party were more likely to obtain short-term or composite loans compared with other enterprises