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Does Money Buy Credit? Firm-Level Evidence on Bribery and Bank Debt

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  • Fungáčová, Zuzana
  • Kochanova, Anna
  • Weill, Laurent

Abstract

We combine information on bribery practices with firm-level accounting data to examine how bribery influences bank debt ratios for a large sample of firms in 14 transition countries. We find that bribery is positively related to firms’ total bank debt ratios, which provides evidence that bribing bank officials facilitates firms’ access to bank loans. This impact varies with the maturity of the bank debt, as bribery contributes to higher short-term bank debt ratios but lower long-term bank debt ratios. Finally, we find that the institutional characteristics of the banking industry influence the relation between bribery and firms’ bank debt ratios.

Suggested Citation

  • Fungáčová, Zuzana & Kochanova, Anna & Weill, Laurent, 2015. "Does Money Buy Credit? Firm-Level Evidence on Bribery and Bank Debt," World Development, Elsevier, vol. 68(C), pages 308-322.
  • Handle: RePEc:eee:wdevel:v:68:y:2015:i:c:p:308-322
    DOI: 10.1016/j.worlddev.2014.12.009
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    Cited by:

    1. repec:mhr:jinste:urn:sici:0932-4569(201709)173:3_454:ppracs_2.0.tx_2-e is not listed on IDEAS
    2. repec:liu:liucej:v:15:y:2018:i:1:p:119-164 is not listed on IDEAS
    3. Fungáčová, Zuzana & Kochanova, Anna & Weill, Laurent, 2015. "Does Money Buy Credit? Firm-Level Evidence on Bribery and Bank Debt," World Development, Elsevier, vol. 68(C), pages 308-322.
    4. Hanousek, Jan & Kochanova, Anna, 2015. "Bribery Environment and Firm Performance: Evidence from Central and Eastern European Countries," CEPR Discussion Papers 10499, C.E.P.R. Discussion Papers.
    5. Hanousek, Jan & Shamshur, Anastasiya & Tresl, Jiri, 2015. "Is bread gained by deceit sweet to a man? Corruption and firm efficiency," CEPR Discussion Papers 10951, C.E.P.R. Discussion Papers.
    6. Claire Giordano, Paloma Lopez-Garcia, 2018. "Is corruption efficiency-enhancing? A case study of the Central and Eastern European region," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 15(1), pages 119-164, June.
    7. Kurronen, Sanna, 2016. "Natural resources and capital structure," BOFIT Discussion Papers 10/2016, Bank of Finland, Institute for Economies in Transition.
    8. repec:vul:omefvu:v:8:y:2017:i:1:id:219 is not listed on IDEAS
    9. Hanousek, Jan & Kochanova, Anna, 2016. "Bribery environments and firm performance: Evidence from CEE countries," European Journal of Political Economy, Elsevier, vol. 43(C), pages 14-28.
    10. Jan Hanousek & Anastasiya Shamshur & Jiri Tresl, 2017. "Firm Efficiency, Foreign Ownership and CEO Gender in Corrupt Environments," CERGE-EI Working Papers wp595, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    More about this item

    Keywords

    bank lending; bribery; corruption; Eastern Europe;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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