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Does connectedness improve SMEs’ access to formal finance? Evidence from post-communist economies

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  • Kobil Ruziev
  • Don J. Webber

Abstract

Evidence suggests that a disproportionately greater share of formal finance is channelled to large enterprises in emerging economies, limiting the flow of appropriately-financed small and medium enterprises (SMEs). Market and information imperfections are conventionally seen as major causes of this misallocation. However, the role of political factors in affecting the distribution of formal finance has become more widely acknowledged in recent times. Our analyses of SMEs in post-communist economies also show that measures of political connectedness improve the chances of receiving bank credit and that the benefits of these links are stronger for well-established and larger SMEs.

Suggested Citation

  • Kobil Ruziev & Don J. Webber, 2019. "Does connectedness improve SMEs’ access to formal finance? Evidence from post-communist economies," Post-Communist Economies, Taylor & Francis Journals, vol. 31(2), pages 258-278, March.
  • Handle: RePEc:taf:pocoec:v:31:y:2019:i:2:p:258-278
    DOI: 10.1080/14631377.2018.1470855
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    Cited by:

    1. Will Bartlett, 2023. "The performance of politically connected firms in South East Europe: state capture or business capture?," Post-Communist Economies, Taylor & Francis Journals, vol. 35(4), pages 351-367, May.
    2. Hoa T. Truong, 2020. "Corruption impacting regional economic growth: A dynamic panel data analysis for the case of Vietnam," Pacific Economic Review, Wiley Blackwell, vol. 25(5), pages 601-619, December.
    3. Xu Dong & Yali Yang & Qinqin Zhuang & Weili Xie & Xiaomeng Zhao, 2022. "Does Environmental Regulation Help Mitigate Factor Misallocation?—Theoretical Simulations Based on a Dynamic General Equilibrium Model and the Perspective of TFP," IJERPH, MDPI, vol. 19(6), pages 1-21, March.

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