Politically Connected Owners

Betz, Timm; Pond, Amy

doi:10.1177/00104140221109428

Cited by 4 publications

(1 citation statement)

References 62 publications

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“…Voice, challenging the state, sees firms defending against predation by the state by forging alliances with likeminded stakeholders (Markus 2012;Johns and Wellhausen 2016) or those who can constrain the state (Frye 2006). Exit, as conceived of existing research, sees firms ceasing operations or being acquired by politically connected owners (Betz and Pond 2023).…”

Section: How Do Firms Cope With Weak Property Rights?mentioning

confidence: 99%

Offshore Capital and Onshore Discrimination: The Biased Effects of India's Anti-corruption Campaigns on Muslim Businesses

Kubinec¹,

Morse²,

Pandya³

2023

Preprint

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Offshore capital flows are a substantively important dimension of international capital mobility. We use leaked data on the ownership of offshore shell companies to estimate Indian firms' propensity to move capital offshore, and we examine how the propensity to offshore varies with the religious identification of a company's board members. We find that when the Bharatiya Janata Party (BJP)'s proportion of seats in a state's legislature increases by 10 percent, the proportion of Muslim-led companies that participate in offshoring declines by approximately 10 percent, while there is little if any reduction in offshoring among Hindu-led companies. We argue that this relationship is best explained by the BJP's anti-corruption initiatives and their much stronger effect on Muslim business owners compared to other ethnic and religious groups. We support this conclusion with an investigation of firm-level mechanisms and a sensitivity analysis of potential confounders.

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Section: How Do Firms Cope With Weak Property Rights?mentioning

confidence: 99%

Offshore Capital and Onshore Discrimination: The Biased Effects of India's Anti-corruption Campaigns on Muslim Businesses

Kubinec¹,

Morse²,

Pandya³

2023

Preprint

View full text Add to dashboard Cite

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Governments as borrowers and regulators

Betz,

Pond

2023

Rev Int Organ

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The ability to borrow is important for government survival. Governments routinely resort to policies that privilege their own debt on financial markets, exploiting their dual role as borrowers and regulators. We label such policies as borrowing privileges. These borrowing privileges nudge investors to hold the government’s own debt. They share similarities with prudential regulation, but skew the market in favor of the government’s debt; and they share similarities with financial repression, but are less severe and thus consistent with the growth of financial markets. Introducing the first systematic dataset documenting the use of such policies across countries and over time, we demonstrate that governments implement borrowing privileges when their interactions with the global economy heighten fiscal needs: when borrowing costs indicate tightened access to credit, when trade liberalization undercuts revenue, and where fixed exchange rates increase the value of fiscal space. Despite the mobility of financial assets and constraints from global markets, governments retain latitude in regulating domestic markets to their own fiscal benefit.

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