Regional favoritism in access to credit

Francis Osei-Tutu () and Laurent Weill
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Francis Osei-Tutu: Paris School of Business

Public Choice, 2024, vol. 200, issue 1, No 13, 293-321

Abstract: Abstract We examine the effect of regional favoritism on the access of firms to credit. Using firm-level data on a large sample of 29,000 firms covering 47 countries, we investigate the hypothesis that firms in the birth regions of national political leaders have better access to credit. Our evidence suggests that firms located in birth regions of political leaders are less likely to be credit constrained. We further find that firms in leader regions feel less discouraged in applying for loans and also get preferential lending from banks.

Keywords: Regional favoritism; Access to credit; Borrower discouragement (search for similar items in EconPapers)
JEL-codes: D72 G21 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Regional Favoritism and Access to Credit (2023)
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DOI: 10.1007/s11127-024-01155-3

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