Corporate philanthropy and bank loans in China

• We examine whether corporate philanthropy improves access to bank loans.
• Increases in corporate philanthropy positively relate to increases in bank loans.
• This positive relationship is stronger for non-SOEs than for SOEs.
• More visibility among customers enhances the positive association.
• More religious influence weakens the positive association.

This study examines the relationship between corporate philanthropy (CP) and firm access to bank loans using a sample of listed Chinese companies. We find a positive association between CP and access to bank loans, suggesting that charitable contributions provide firms with an advantage in obtaining access to external financing. This relationship is stronger for non-State-owned companies (non-SOEs) than for State-owned companies (SOEs), indicating that SOEs and non-SOEs may have different motivations for making charitable contributions. We further find that more visibility among customers enhances the positive association between CP and bank loans while more visibility among investors weakens the positive association. We also find that more religious influence weakens the positive relationship between CP and bank loans. Our findings have implications for academics and practitioners seeking to understand the positive role of CP for firms and the channels through which CP can positively affect firm performance.