Elections hinder firms' access to credit

Florian Leon and Laurent Weill

Economics of Transition and Institutional Change, 2024, vol. 32, issue 1, 73-107

Abstract: To analyze whether the occurrence of elections affects access to credit for firms, we perform an investigation using firm‐level data covering 44 developed and developing countries. The results show that elections impair access to credit. Specifically, firms have lower access to credit in election years and pre‐election years as elections exacerbate political uncertainty. While higher borrower discouragement is a tangible negative effect of elections, their occurrence per se does not seem to affect loan acceptance by banks. We also document that the negative relationship between elections and credit access is shaped by country and election characteristics as well as firm characteristics.

Date: 2024
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https://doi.org/10.1111/ecot.12377

Related works:
Working Paper: Elections hinder firms' access to credit (2023)
Working Paper: Elections Hinder Firms' Access to Credit (2021)
Working Paper: Elections Hinder Firms’ Access to Credit (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:ectrin:v:32:y:2024:i:1:p:73-107

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