We used a detailed data set on Thai firms before the Asian crisis of 1997 to examine whether business connections predicted preferential access to long-term bank credit. We found that firms with connections to banks and politicians had greater access to long-term debt than firms without such...

The allocation of credit by banks on 'soft' terms to friends and relatives - often termed cronyism - rather than on the basis of 'hard' market criteria in the years leading up to the Asian financial crisis of 1997-98 has been hypothesized as an important cause of the crisis. These practices had...

The allocation of credit by banks on quot;softquot; terms to friends and relatives - often termed cronyism - rather than on the basis of quot;hardquot; market criteria in the years leading up to the Asian financial crisis of 1997-98 has been hypothesized as an important cause of the crisis....

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....