Business Friendliness: A Double-Edged Sword

In this paper, we test the hypothesis that business-friendly local-government policies combined with weak legal institutions lead to lower economic welfare in the form of greater fraud activity. Using data of almost 3000 failed peer-to-peer (P2P) lending platforms in China, labeled as “runaways”, we...

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Bibliographic Details
Published inSustainability Vol. 13; no. 4; p. 1819
Main Authors Li, Mengyin, Phan, Phillip H., Sun, Xian
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 08.02.2021
Subjects
Competition
Consumption
Credit bureaus
Economic development
Economic growth
Economic reform
Emerging markets
Fraud
Growth models
Hypotheses
Law enforcement
Peer to peer computing
Peer to peer lending
Public policy
R&D
Regulation of financial institutions
Research & development
Startups
Sustainable development
China
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Summary:In this paper, we test the hypothesis that business-friendly local-government policies combined with weak legal institutions lead to lower economic welfare in the form of greater fraud activity. Using data of almost 3000 failed peer-to-peer (P2P) lending platforms in China, labeled as “runaways”, we find that they are more prevalent in provinces with business-friendly policies with weak law-enforcement regimes.
ISSN:2071-1050
2071-1050
DOI:10.3390/su13041819