Journal of Scientific Papers

ECONOMICS & SOCIOLOGY


© CSR, 2008-2015
ISSN 2071-789X



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    Centre of Sociological Research

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    Alexander Dubcek University of Trencín, Faculty of Social and Economic Relations (Slovak Republic)



     
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Connected Lending and Aggregate Productivity

Vol. 8, No 3, 2015

Siwapong Dheera-aumpon

 

Department of Economics, Faculty of Economics, Kasetsart University, Bangkok, Thailand,

 

E-mails: siwapongt@gmail.com, fecospd@ku.ac.th

CONNECTED LENDING AND AGGREGATE PRODUCTIVITY

 

 

Abstract. The issue of connected lending is shown to be prevalent in many countries. This paper documents that in cross-country data connected lending is negatively associated with aggregate output and aggregate productivity. A model incorporating connected lend is presented and used to quantitatively study the effect of connected lending on aggregate productivity. The results show that connected lending has a moderately negative effect on aggregate productivity and can be  better explained by the crony view than the information view. This implies that special connections between firms and banks generally do not reduce the asymmetric information between them.

 

Received: May, 2015

1st Revision: July, 2015

Accepted: September, 2015

 

DOI: 10.14254/2071- 789X.2015/8-3/5

JEL Classification: O1, O4

Keywords: financial intermediaries, productivity.