Abstract: In the transition economies with imperfect institution, government quality and financial transparence play key roles in allocating credit resource, thus it affects firm′s financing constraint. For the effect and mechanism of this effect, this paper carries out test and investigation by using World Bank questionnaire data from 2848 Chinese Enterprises. The results show that, the government gives a helping hand to those firms which are in trouble in terms of financing: government can enhance the level of government quality by reducing the corruption level, strengthening the politic stability, improving the quality of legal system, reinforcing public security and reducing tax burden to provide a good institutional environment for enterprise financing and improve the government quality, which is conducive to relieving the problem of financing constraint; meanwhile, enhancing firm financial transparence can effectively reduce the information asymmetry between enterprises and financing institutions and improve the ability of access to external financing, then mitigate the problem of financing constraint; government quality has a regulatory role, and financial transparence has a stronger effect in mitigating the firm′s financing constraint in the region with higher level of government quality.

Key words: government quality；financial transparence, financing constraint, propensity score matching