Political connectedness and formal finance in transition economies

Ruziev, Kobil

Abstract

Although small- and medium-sized enterprises (SMEs) represent more than 90% of all enterprises and play an important role in employment generation, they lack access to affordable formal finance. Conventionally, market failures and information imperfections are seen as major causes of this misallocation. However, the role of social and political factors in resource allocation, including access to formal finance, has recently become more widely accepted. Firm-level evidence from postcommunist economies, for example, shows that political connectedness improves access to bank credit, but is not associated with enterprise growth.

• Journal Article Type: Article
• Acceptance Date: Oct 12, 2017
• Publication Date: Nov 7, 2017
• Deposit Date: Nov 7, 2017
• Publicly Available Date: Nov 13, 2017
• Journal: IZA World of Labor
• Print ISSN: 2054-9571
• Peer Reviewed: Peer Reviewed
• Issue: 398
• Pages: 1-11
• DOI: https://doi.org/10.15185/izawol.398
• Keywords: transition economies, formal finance, connectedness, firm-level analysis
• Public URL: https://uwe-repository.worktribe.com/output/878694
• Publisher URL: http://dx.doi.org/10.15185/izawol.398
• Related Public URLs: https://wol.iza.org/uploads/articles/398/pdfs/political-connectedness-and-formal-finance-in-transition-economies.pdf?v=1
• Contract Date: Nov 7, 2017