Political connections, collateral favours and debt access: some Tunisian evidence
by Fayrouz Bencheikh; Neila Boulila Taktak
International Journal of Management and Enterprise Development (IJMED), Vol. 18, No. 1/2, 2019

Abstract: The purpose of the paper is to study the effect of political connections on collateralisation and debt access. The study is carried out on a sample of Tunisian firms on the period 2007-2012. In the first step, we have taken into consideration an aggregate measure of collateral which is fixed assets. Results show that only long-term debt can be covered by fixed assets owned by connected firms. Then, in a second step, we have been studying the collateral liquidity through three components: lands, buildings and machineries and equipment. The major finding is that politically connected firms were able to gain access to debt without sufficient liquid collaterals.

Online publication date: Mon, 11-Feb-2019

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