[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/8956.html
   My bibliography  Save this paper

Political Connections and Financial Constraints : Evidence from Transition Countries

Author

Listed:
  • Bussolo,Maurizio
  • De Nicola,Francesca
  • Panizza,Ugo G.
  • Varghese,Richard
Abstract
This paper examines whether political connections ease financial constraints faced by firms. Using firm-level data from six Central and Eastern European economies, the paper shows that politically connected firms: (i) have high levels of leverage, (ii) have low levels of profitability, (iii) are less capitalized, (iv) have low marginal productivity of capital, and (v) do not invest more than unconnected firms. Next, the paper shows that connected firms borrow more because they have easier access to credit and that political connections lead to a misallocation of capital. The results are consistent with the idea that political connections distort capital allocation and may have welfare costs.

Suggested Citation

  • Bussolo,Maurizio & De Nicola,Francesca & Panizza,Ugo G. & Varghese,Richard, 2019. "Political Connections and Financial Constraints : Evidence from Transition Countries," Policy Research Working Paper Series 8956, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8956
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/146711565095465049/pdf/Political-Connections-and-Financial-Constraints-Evidence-from-Transition-Countries.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yu-Hong Ai & Di-Yun Peng & Huan-Huan Xiong, 2021. "Impact of Environmental Regulation Intensity on Green Technology Innovation: From the Perspective of Political and Business Connections," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    2. Kolliopoulos, Athanasios, 2021. "Reforming the Greek financial system: a decade of failure," LSE Research Online Documents on Economics 108523, London School of Economics and Political Science, LSE Library.
    3. Babasyan, Davit & Gu, Yunfan & Melecky, Martin, 2023. "Late banking transitions: Comparing Uzbekistan to earlier reformers," World Development Perspectives, Elsevier, vol. 30(C).
    4. Athanasios Kolliopoulos, 2021. "Reforming the Greek Financial System: a decade of failure," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 155, Hellenic Observatory, LSE.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:8956. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.