CXO

The Value Of Business Networks In Emerging Economies: An Analysis Of Firms' External Financing Opportunities

Date Added: May 2011
Format: PDF

The paper argues that networked firms are likely to have an advantage in securing external finance in countries with weak legal and judicial institutions since it helps financial institutions to minimize the underlying agency costs of lending. An analysis of recent BEEPS data from fifteen Central and Eastern European (CEE) countries lends some support to this hypothesis. Even after controlling for other factors, firms affiliated to business associations are more likely to secure bank finance.