Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190045 
Authors: 
Year of Publication: 
2017
Series/Report no.: 
WIDER Working Paper No. 2017/200
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
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. Moreover, politically connected firms accessing credit face lower cost-of-capital than non-connected SMEs not excluded from formal financial markets. However, the impact of political connections is most valuable during periods of financial distress, but less prevalent during business cycle upswings.
Subjects: 
Credit constraints
political connections
Vietnam
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-426-1
Document Type: 
Working Paper

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