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Politics, Investor Protection and Competition

Subject

Finance

Authors / Editors

Perotti E;Volpin P

Publication Year

2007

Abstract

External finance is critical for less established entrepreneurs, so poor investor protection can hinder competition. We model how lobbying by incumbents may reduce access to finance in countries where politicians are less accountable to voters. In a broad cross-section of countries and industries, we find that (i) the number of producers and entry rates are positively correlated with investor protection in financially dependent sectors, and (ii) countries with more accountable political institutions have better investor protection.

Keywords

Financial Development, Investor protection, Competition, Lobbying, Entry, Cost of Entry

Available on ECCH

No


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