Credit Access and the Firm–Government Connection: Is There Any Link?

Trang Thu Phan (), Linh Nhat Ta, Trang Tran Minh Pham and Dung Thi Thuy Pham
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Trang Thu Phan: School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam
Linh Nhat Ta: School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam
Trang Tran Minh Pham: Faculty of Investment, National Economics University, Hanoi 100000, Vietnam
Dung Thi Thuy Pham: School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam

JRFM, 2023, vol. 16, issue 11, 1-19

Abstract: Access to credit for businesses is an unresolved issue, especially in developing countries and transition economies. There has been a lot of research exploring factors affecting firms’ credit accessibility. Particularly, factors related to borrowers and lenders are always placed under consideration. However, besides those factors, institutional elements could also play an important role in guiding companies’ operations. In countries where the economy lacks transparency and low-level development is limited, informal institutional factors can have potential impacts. In this paper, we focus on exploring the relationship between firm–government links and credit access, thereby offering managerial implications through utilizing cross-sectional data sets at the firm level, with an initial sample of 26,849 observations from 38 countries at different levels of development around the world. The results show a positive correlation of firm–government connection with credit access. Moreover, this relationship may vary depending on the market in which the business primarily operates. Specifically, firms working internationally are less influenced by links with governments and tend to rely more on their own characteristics and conditions.

Keywords: credit access; corporate governance; informal institutional impacts; firm–government connections; SMEs; transitional economies (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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