Working Paper: CEPR ID: DP17300
Authors: Ralph De Haas; Sergei Guriev; Alexander Stepanov
Abstract: Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show that state ownership is robustly and negatively related to corporate leverage. This relationship holds across most of the firm-size distribution - with the important exception of the largest companies - and is stronger in countries with weak political and legal institutions. A panel data analysis of privatized firms and a comparison of privatized with matched control firms yield similar qualitative and quantitative effects of state ownership on leverage.
Keywords: State Ownership; Privatization; Corporate Debt; State Banks
JEL Codes: D22; F36; G32; G38; H11; H81; L33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| state ownership (H13) | borrowing costs (H74) |
| state ownership (H13) | leverage (G24) |
| state ownership (H13) | creditworthiness perceived by lenders (G21) |
| institutional quality (L15) | corporate leverage (G32) |
| state ownership (H13) | corporate leverage (G32) |
| state ownership (H13) | corporate leverage (G32) |