Does money buy credit? : Firm-level evidence on bribery and bank debt

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Title: Does money buy credit? : Firm-level evidence on bribery and bank debt
Author: Fungáčová, Zuzana ; Weill, Laurent ; Kochanova, Anna
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 4/2014
Year of publication: 2014
Publication date: 23.1.2014
Published in: Published in World Development, Volume 68, April 2015, Pages 308–322
DOI: 10.1016/j.worlddev.2014.12.009
Pages: 40 s.
Keywords: yritykset; luotonanto; rahoitus; luotot; pankkitoiminta; rikollisuus; korruptio; Itä-Eurooppa; siirtymätaloudet; Bofit-kokoelma; lahjonta
JEL: G32; K4; P2
Abstract: This study examines how bribery influences bank debt ratios for a large sample of firms from 14 transition countries. We combine information on bribery practices from the BEEPS survey with firm-level accounting data from the Amadeus database. Bribery is measured by the frequency of extra unofficial payments to officials to "get things done". We find that bribery is positively related to firms' bank debt ratios, which provides evidence that bribing bank officials facilitates firms' access to bank loans. This impact differs with the maturity of bank debt, as bribery contributes to higher short-term bank debt ratios but lower long-term bank debt ratios. Finally, we find that the institutional characteristics of the banking industry influence the relation between bribery and firms' bank debt ratios. Higher levels of financial development constrain the positive effects of bribery whereas larger market shares of state-owned banks have the opposite effect. Foreign bank presence also affects the impact of bribery, albeit this effect depends on the maturity of firms' bank-debt. JEL Codes: G32, K4, P2 Keywords: bank lending, bribery, corruption, Eastern Europe.
Rights: https://helda.helsinki.fi/bof/copyright


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