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Banks, freedom, and political connections: New evidence from around the world

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  • Cegłowski, Bartłomiej
  • Jackowicz, Krzysztof
  • Kozłowski, Łukasz
  • Kuchciak, Iwa

Abstract

This study examines how various facets of social and political freedom shape the impact of political connections on bank lending. Using a new dataset covering the period 2007–2018 and more than 100 countries, we find that the establishment of political connections stimulates lending, but only in countries with constrained media freedom and restricted freedom of association and expression, as well as in those scoring low on political rights and civil liberties. These results suggest that social and political freedom constitute critical factors that limit the resource-allocation distortions caused by political connections.

Suggested Citation

  • Cegłowski, Bartłomiej & Jackowicz, Krzysztof & Kozłowski, Łukasz & Kuchciak, Iwa, 2025. "Banks, freedom, and political connections: New evidence from around the world," Journal of Financial Stability, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finsta:v:76:y:2025:i:c:s1572308924001384
    DOI: 10.1016/j.jfs.2024.101353
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    More about this item

    Keywords

    freedom; banks; political connections; social control;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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