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State–Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis

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  • Burhan Can Karahasan
  • Fırat Bilgel

Abstract

This study investigates the triangular relationship among state–business relations, financial access and economic performance in the Middle East and North Africa. We hypothesize that financial intermediation is a significant mediating factor in the relationship between state–business relations and firm performance. Employing a causal mediation analysis, results show that inefficient ties with the state are a cause of poor firm performance. Inefficient state–business relations reduce firm performance by 2.3 to 4.4 per cent through access to finance and by 12 to 40 per cent via its direct effect. About 3 to 16 per cent of the total effect is mediated through financial access, while the remaining is the direct effect. © 2020 John Wiley & Sons, Ltd.

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  • Burhan Can Karahasan & Fırat Bilgel, 2020. "State–Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(7), pages 1033-1074, October.
    • Handle: RePEc:wly:jintdv:v:32:y:2020:i:7:p:1033-1074
    DOI: 10.1002/jid.3484
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