Capital accumulation in a politically unstable region

Risto Herrala () and Rima Turk-Ariss
Authors registered in the RePEc Author Service: Rima Turk Ariss

Journal of International Money and Finance, 2016, vol. 64, issue C, 1-15

Abstract: We investigate the different channels by which political instability impacts capital accumulation using a unique data of firms from the Middle East and North Africa (MENA), a region that has long suffered from political unrest, and a novel empirical method. We find that political stability shapes firm investment mainly via its influence on credit conditions. Political instability tightens borrowing constraints and impedes capital accumulation, thereby adversely affecting economic growth.

Keywords: MENA countries; Capital accumulation; Political stability (search for similar items in EconPapers)
JEL-codes: E2 G31 H1 O16 P48 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:64:y:2016:i:c:p:1-15

DOI: 10.1016/j.jimonfin.2016.01.008

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