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Are politically connected firms less constrained in credit markets?

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  • John Rand

Abstract

Utilizing a panel of over 2,000 Vietnamese SMEs over a 10-year period, we analyse the importance of being politically connected on both access and cost-of-credit obtained from formal financial institutions. Controlling for unobserved time-invariant firm-level heterogeneity, productivity self-selection concerns, and access to alternative credit markets, we show that political connections decreases the likelihood of being credit-constrained by 4 percentage points.

Suggested Citation

  • John Rand, 2017. "Are politically connected firms less constrained in credit markets?," WIDER Working Paper Series wp-2017-200, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp-2017-200
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    References listed on IDEAS

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    5. Fan, Joseph P.H. & Wong, T.J. & Zhang, Tianyu, 2007. "Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms," Journal of Financial Economics, Elsevier, vol. 84(2), pages 330-357, May.
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