State-Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis

Karahasan, Burhan Can; Bilgel, Fırat

doi:10.2139/ssrn.3707032

Cited by 3 publications

(8 citation statements)

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“…Overall, the results are consistent with the findings from previous studies (Amsden, 1989;Fajnzylber et al, 2009;Sen and Velde, 2009;Qureshi and Te Velde, 2013;Hosny, 2017;Arayssi et al, 2019;Karahasan and Bilgel, 2020;Ozdamar et al, 2020;Abdo and Fakih, 2022). Our results show that the obstacles in business and investment climate can negatively affect the firm performance, which is also found in the previous studies.…”

Section: Resultssupporting

confidence: 92%

“…Our results show that the obstacles in business and investment climate can negatively affect the firm performance, which is also found in the previous studies. In particular, Hosny (2017) (2020) show that political stability is a significant determinant of firm performance, while Karahasan and Bilgel (2020) found obstacles related to access to finance reduce firm performance by 2.3-4.4% in eight MENA region countries and Turkey. These findings confirm the results of our study where we employ an index of business and investment climate that includes various obstacles, such as access to finance, political instability, corruption and electricity infrastructure among others.…”

Section: Resultsmentioning

confidence: 99%

“…The business and investment climate nexus climate obstacles and resource misallocation, as we do in Egypt and Turkey. There are few recent studies exploring the role of business and investment climate in the MENA region countries (EBRD et al, 2016;Brown and Earle, 2017;Hosny, 2017;Karahasan and Bilgel, 2020;Ozdamar et al, 2020). For instance, Karahasan and Bilgel (2020) using a causal mediation analysis explored the role of access to finance in eight MENA region countries and Turkey over the period 2013-2015, and they found obstacles related to access to finance reduce firm performance by about 2.3-4.4%.…”

Section: Literature Reviewmentioning

confidence: 99%

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The nexus between business–investment climate and firm performance in the Middle East and North Africa (MENA) region

Giovanis

Özdamar²

2022

REPS

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PurposeEffective business and investment climate can lead to a higher rate of investment, profits and improved productivity, through the creation of an institutional environment, where the state provides high-quality public goods. This study aims to explore the impact of the business–investment climate on firm performance in a sample of six countries in the Middle East and North Africa (MENA) region and Turkey. Furthermore, we extend our analysis to explore the impact of business–investment climate on the resource misallocation in Egypt and Turkey.Design/methodology/approachThe study used fixed effects models to investigate the relationship between the business and investment climate, expressed by the obstacles in state–business relations- and the firm performance, which is measured by the firm's value-added, the labour productivity and the total factor productivity To reduce the endogeneity coming from possible reverse causality and the perceptions about the business climate, an instrumental variables (IV) approach applying the two-stage least squares (2SLS) method was followed. The empirical analysis relies on data derived from the World Bank Enterprise Surveys.FindingsBased on estimates, the obstacles in business climate may reduce the firm performance measures by 15–40%. These findings indicate the importance of quality in the business climate and how the improvement in its efficiency can have a very considerable positive impact on firms' performance and thus on the overall economic growth of a country.Originality/valueThis is the first study exploring the impact of business–investment climate on various measures of the firm performance and the resource misallocation in a large sample of countries in the MENA region.

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Section: Resultssupporting

confidence: 92%

Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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The nexus between business–investment climate and firm performance in the Middle East and North Africa (MENA) region

Giovanis

Özdamar²

2022

REPS

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“…Faccio (2006) defines a politically-connected company as one of which includes at least one large shareholder or top manager who is a minister or a parliament member or is otherwise related to a politician or a political party. Political connections are expected to enhance the company's access to financial resources and therefore its economic growth Karahasan and Bilgel, 2018).…”

Section: Introductionmentioning

confidence: 99%

Political connections, government ownership, and earnings management: evidence from Jordan

Ahmed

Mansour

Tahat

et al. 2021

IJAAPE

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Section: Introductionmentioning

confidence: 99%

Political connections, government ownership, and earnings management: evidence from Jordan

Alhadab

Abdullatif

Ahmed

et al. 2021

IJAAPE

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State-Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis

Cited by 3 publications

References 0 publications

The nexus between business–investment climate and firm performance in the Middle East and North Africa (MENA) region

The nexus between business–investment climate and firm performance in the Middle East and North Africa (MENA) region

Political connections, government ownership, and earnings management: evidence from Jordan

Political connections, government ownership, and earnings management: evidence from Jordan

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