Political connections, investment inefficiency, and the Indian banking crisis

被引:9
作者
Chahal, Rishman Jot Kaur [1 ]
Ahmad, Wasim [1 ,2 ]
机构
[1] Indian Inst Technol Kanpur, Dept Econ Sci, Kanpur 208016, Uttar Pradesh, India
[2] London Sch Econ & Polit Sci LSE, LSE India Observ, London, England
关键词
Political connections; Government banks; Overinvestment; Networks; GOVERNMENT-OWNED BANKS; PANEL-DATA; CASH FLOW; PRODUCTION FRONTIERS; CEO OVERCONFIDENCE; FIRM PERFORMANCE; DIRECTORS; MARKETS; FINANCE; BAILOUT;
D O I
10.1016/j.qref.2020.10.016
中图分类号
F [经济];
学科分类号
02 ;
摘要
This paper examines the investment inefficiency of politically connected firms (PCFs) in the Indian context. We argue that the investment inefficiency of PCFs may reveal the Twin-balance sheet (TBS) characteristics of the banking crisis through interactions between PCFs and Government-owned Banks (GOBs). Using the unique dataset on PCFs in India and the panel quantile regression, we find that the strong PCFs exhibit a higher level of investment inefficiency than the weak PCFs. We also highlight the advantages of quantile regression in an overinvestment analysis. The findings may help trace the link between the investment boom of the mid-2000s and the subsequent twin-balance sheet crisis. The results are entirely new in the Indian context. (C) 2020 Board of Trustees of the University of Illinois. Published by Elsevier Inc. All rights reserved.
引用
收藏
页码:16 / 30
页数:15
相关论文
共 52 条
[31]  
JENSEN MC, 1986, AM ECON REV, V76, P323
[32]   Cronyism and capital controls: evidence from Malaysia [J].
Johnson, S ;
Mitton, T .
JOURNAL OF FINANCIAL ECONOMICS, 2003, 67 (02) :351-382
[33]   Do lenders favor politically connected firms? Rent provision in an emerging financial market [J].
Khwaja, AI ;
Mian, A .
QUARTERLY JOURNAL OF ECONOMICS, 2005, 120 (04) :1371-1411
[34]   Quantile regression for longitudinal data [J].
Koenker, R .
JOURNAL OF MULTIVARIATE ANALYSIS, 2004, 91 (01) :74-89
[35]   PRODUCTION FRONTIERS, PANEL DATA, AND TIME-VARYING TECHNICAL INEFFICIENCY [J].
KUMBHAKAR, SC .
JOURNAL OF ECONOMETRICS, 1990, 46 (1-2) :201-211
[36]   Political connections, financing and firm performance: Evidence from Chinese private firms [J].
Li, Hongbin ;
Meng, Lingsheng ;
Wang, Qian ;
Zhou, Li-An .
JOURNAL OF DEVELOPMENT ECONOMICS, 2008, 87 (02) :283-299
[37]   Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms [J].
Ling, Leng ;
Zhou, Xiaorong ;
Liang, Quanxi ;
Song, Pingping ;
Zeng, Haijian .
FINANCE RESEARCH LETTERS, 2016, 18 :328-333
[38]   Does overconfidence affect corporate investment? CEO overconfidence measures revisited [J].
Malmendier, U ;
Tate, G .
EUROPEAN FINANCIAL MANAGEMENT, 2005, 11 (05) :649-659
[39]   Who makes acquisitions? CEO overconfidence and the market's reaction [J].
Malmendier, Ulrike ;
Tate, Geoffrey .
JOURNAL OF FINANCIAL ECONOMICS, 2008, 89 (01) :20-43
[40]   Political connections, bank deposits, and formal deposit insurance [J].
Nys, Emmanuelle ;
Tarazi, Amine ;
Trinugroho, Irwan .
JOURNAL OF FINANCIAL STABILITY, 2015, 19 :83-104