Connections to Banks and Politicians Key to Accessing Loans in Thailand
The study looked at how banks in Thailand gave loans to businesses before the financial crisis in the late 1990s. They found that companies with connections to banks and politicians got more long-term loans with less collateral than those without connections. These connected companies also used less short-term loans. The study suggests that having connections was the main reason why some companies got more long-term loans, and this weak corporate governance may have contributed to the severity of the financial crisis.