Banks, freedom, and political connections: New evidence from around the world

Bartłomiej Cegłowski, Krzysztof Jackowicz, Łukasz Kozłowski and Iwa Kuchciak

Journal of Financial Stability, 2025, vol. 76, issue C

Abstract: This study examines how various facets of social and political freedom shape the impact of political connections on bank lending. Using a new dataset covering the period 2007–2018 and more than 100 countries, we find that the establishment of political connections stimulates lending, but only in countries with constrained media freedom and restricted freedom of association and expression, as well as in those scoring low on political rights and civil liberties. These results suggest that social and political freedom constitute critical factors that limit the resource-allocation distortions caused by political connections.

Keywords: freedom; banks; political connections; social control (search for similar items in EconPapers)
JEL-codes: G20 G21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:76:y:2025:i:c:s1572308924001384

DOI: 10.1016/j.jfs.2024.101353

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