Does connectedness improve SMEs’ access to formal finance? Evidence from post-communist economies
Kobil RuzievBristol Business School, University of the West of England , Bristol, UKDon J. WebberBristol Business School, University of the West of England , Bristol, UK
2018en
ABI
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.
Identifiers
Citations and references
Cited by 20 references