Democracy and credit

• 成果类型: Article
• 署名作者: Delis, Manthos D.; Hasan, Iftekhar; Ongena, Steven
• 署名单位: Montpellier Business School; Fordham University; Bank of Finland; University of Sydney; University of Zurich; Swiss Finance Institute (SFI); KU Leuven; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2019.09.013
• 发表日期: 2020
• 页码: 571-596
• 关键词: Loan pricing; Loan spreads; Democratic institutions; reversals

摘要

Does democratization reduce the cost of credit? Using global syndicated loan data from 1984 to 2014, we find that democratization has a sizable negative effect on loan spreads: a 1-point increase in the zero-to-ten Polity IV index of democracy shaves at least 19 basis points off spreads, but likely more. Reversals to autocracy hike spreads more strongly. Our findings are robust to the comprehensive inclusion of relevant controls, to the instrumentation with regional waves of democratization, and to a battery of other sensitivity tests. We thus highlight the lower cost of loans as one relevant mechanism through which democratization can affect economic development. (C) 2019 Elsevier B.V. All rights reserved.