Bank loan supply in the financial crisis: Evidence from the role of political connection

Wei Che Tsai, Wei Yuan Wang, Po Hsin Ho, Chih-Yung Lin*

*Corresponding author for this work

Research output: Contribution to journalArticle

4 Scopus citations

Abstract

We investigate the changes in bank loan supply during the 2007-2008 financial crisis, with particular focus on the influence of political connections. We demonstrate that although political connections can help firms obtain lower loan rates during the precrisis period, such benefits disappear in the postcrisis period. Moreover, the loan acceptance ratio for politically connected firms is enhanced in the postcrisis period, especially for the politically connected firms with high risks. Evidence reveals that the focus of the benefits for politically connected firms is more likely to shift from the loan rate to the loan acceptance ratio during the postcrisis period.

Original languageEnglish
Pages (from-to)487-497
Number of pages11
JournalEmerging Markets Finance and Trade
Volume52
Issue number2
DOIs
StatePublished - 1 Feb 2016

Keywords

  • Bank loan supply
  • loan acceptance ratio
  • loan rate
  • political connections

Fingerprint Dive into the research topics of 'Bank loan supply in the financial crisis: Evidence from the role of political connection'. Together they form a unique fingerprint.

  • Cite this