State-Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis
Journal of International Development, 2020
52 Pages Posted: 30 Nov 2020
Date Written: October 7, 2020
This study investigates the triangular relationship among state-business relations, financial access and economic performance in the Middle East and North Africa. We hypothesize that financial intermediation is a significant mediating factor in the relationship between state-business relations and firm performance. Employing a causal mediation analysis, results show that inefficient ties with the state are a cause of poor firm performance. Inefficient state-business relations reduce firm performance by 2.3 to 4.4 percent through access to finance and by 12 to 40 percent via its direct effect. About 3 to 16 percent of the total effect is mediated through financial access while the remaining is the direct effect.
Keywords: Financial Intermediation; Causal Mediation Analysis; MENA; State-Business Relations
JEL Classification: F65; O43
Suggested Citation: Suggested Citation