Democracy and Credit “Democracy Doesn`t Come Cheap” But At Least Credit to Its Corporations Will Be
Manthos Delis (elmanthos@hotmail.com),
Iftekhar Hasan and
Steven Ongena
No 17-14, Swiss Finance Institute Research Paper Series from Swiss Finance Institute
Abstract:
Does democratization reduce the cost of credit? Using global syndicated loan data from 1984 to 2014, we show that democratization has a sizeable negative effect on loan spreads: a one point increase in the zero-to-ten Polity IV index of democracy shaves on average 21 basis points off spreads. Reversals to autocracy hike spreads more strongly. Our results are robust to the comprehensive inclusion of relevant controls, to the instrumentation with regional waves of democratization, and to a battery of sensitivity tests. We thus highlight the lower cost of loans as one relevant mechanism through which democratization may affect economic development.
Keywords: Loan pricing; Loan spreads; Democratic institutions; Reversals (search for similar items in EconPapers)
JEL-codes: G21 G30 P16 P26 P27 P47 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2017-05
New Economics Papers: this item is included in nep-ban and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2896818 (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1714
Access Statistics for this paper
More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal (rps@sfi.ch).