Elections Hinder Firms’ Access to Credit

Florian Leon and Laurent Weill

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: We investigate whether the occurrence of elections affect access to credit for firms. We perform an investigation using firm-level data covering 44 developed and developing countries. We find that elections have a detrimental influence on access to credit: firms are more credit-constrained in election years but also in pre-election years. We explain this finding by the fact that elections exacerbate political uncertainty. The negative effect of elections takes place through lower credit demand, whereas the occurrence of elections does not affect credit supply. We further establish that the design of political and financial systems affects how elections influence access to credit.

Keywords: Elections; access to credit; credit constraints. (search for similar items in EconPapers)
JEL-codes: D72 G21 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-fdg, nep-pol and nep-sbm
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http://ifs.u-strasbg.fr/large/publications/2021/2021-03.pdf (application/pdf)

Related works:
Journal Article: Elections hinder firms' access to credit (2024)
Working Paper: Elections hinder firms' access to credit (2023)
Working Paper: Elections hinder firms' access to credit (2022)
Working Paper: Elections Hinder Firms' Access to Credit (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2021-03

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