Connected Lending: Thailand Before the Financial Crisis

Posted: 16 Nov 2003

See all articles by Yupana Wiwattanakantang

Yupana Wiwattanakantang

National University of Singapore - Department of Finance

Raja Kali

University of Arkansas - Department of Economics

Chutatong Charumilind

Ministry of Finance, Thailand

Abstract

We use a detailed dataset on Thai firms before the Asian crisis of 1997 to examine whether business connections predict preferential access to long term bank credit. We find that firms with connections to banks and politicians had greater access to long-term debt than firms without such ties. Connected firms need less collateral, obtain more long term loans, and appear to use less short term loans than those without connections. We do not find connections between banks and firms reducing asymmetric information problems. This is consistent with research implicating weak corporate governance in the extent and severity of the crisis.

Suggested Citation

Wiwattanakantang, Yupana and Kali, Raja and Charumilind, Chutatong, Connected Lending: Thailand Before the Financial Crisis. Available at SSRN: https://ssrn.com/abstract=464181

Yupana Wiwattanakantang (Contact Author)

National University of Singapore - Department of Finance ( email )

Business School
Mochtar Riady Building #7-44, 15 Kent Ridge Dri
Singapore, 117592
Singapore
65-6516-1912 (Phone)

Raja Kali

University of Arkansas - Department of Economics ( email )

Sam M. Walton College of Business
Fayetteville, AR 72701
United States
479-575-6219 (Phone)
479-575-3241 (Fax)

HOME PAGE: http://wcob.uark.edu/rkali/index.html

Chutatong Charumilind

Ministry of Finance, Thailand ( email )

Thailand

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