Factions matter: personal networks and the distribution of bank loans in China

Abstract

This article begins by focusing on the distributive implications of factions, as conceptualized by past theorists. This article then operationalizes faction as a quantitative variable using some well-established assumptions about factions. A cross-section, time-series model is then used to test the impact of factions and the intensity of factional ties on the distribution of bank loans in reform era China. Two pairs of case studies are further used to illustrate the importance of factional ties in the allocation of scarce resources in the Chinese political system. The findings are unambiguous: factional ties with top leaders can bring substantial advantage in obtaining scarce resources in the system.