Crony capitalism is a negative term used to refer the business dealings carried out by the Government officers in a capitalist economy.

Nature of crony capitalism are as follows:- 

1. Favours political authorities: Crony capitalism is a system in which, close associates of the people in power who enact laws and execute policies, get favors that have a large economic impact.

2. Cronies are rewarded: with the provision to charge higher prices for their output, than would prevail in a competitive market. Funds are funneled to the enterprises of cronies through government-controlled banks.

3. Protection of assets: Crony capitalism allows Government to guarantee a subset of asset holders that their property rights are protected. As long as their assets are protected, these asset holders will continue to invest as if there were universal protection of property rights.

4. Share in the rents generated by the asset holders: The members of the Government or members of their families, share the rents generated by the asset holders. This may take the form of jobs, co-investments or even transfers of stock. Crony capitalism goes & hand in hand with corruption.

5.The concentration of economic Power: A few business groups are cronies, influence state policies and pool their assets in private corporate sectors. Such concentration gives birth to crony capitalism. Crony capitalism is an economic phenomenon with political consequences. In crony capitalism, the Government makes deals in closed doors, without public review and approval.