"Corporate Political Activities, Bank-Firm Relations, and Credit Ratings in a Transitional Economy".

We investigate the effects of bank-firm relationships and corporate political activities on SMEs' credit rating and probability of acquiring loans from banks. Analyses show that the strength of bank-initiated relationship is positively correlated with firms' credit rating; and personal contact between firm and the bank is negatively associated with firms' credit rating, which is in accordance with what we call the dark side of close relationships. Empirical results also show that among the various manipulation activities, only cognitive manipulation is positively related to credit rating and loan acquisition. In addition, we find that institutional contexts moderate the effects of cognitive manipulations: in low marketization areas, corporate cognitive manipulation plays a more important role in firm getting a higher credit rating than it does in high marketization areas. [ABSTRACT FROM AUTHOR]