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Politics, Investor Protection and Competition



Authors / Editors

Perotti E;Volpin P

Publication Year



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.


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

Available on ECCH


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