Abstract
This paper examines the impact of property rights protection on the cost of bank loans. Using a large sample of Chinese listed firms for the 2004-2010 period and the difference-in-difference method, we find that property rights protection has a negative effect on the cost of loans. The result is robust to a battery of sensitivity tests. Mechanism tests show that property rights protection reduces the cost of loans by alleviating information asymmetry. Our study provides new insight into the impact of property rights protection on the cost of loans.
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