Title: Political connections, collateral favours and debt access: some Tunisian evidence

Authors: Fayrouz Bencheikh; Neila Boulila Taktak

Addresses: Higher Institute of Management of Gabès, Jilani Habib Street, Gabès 6002, Tunisia ' IHEC Carthage, Victor Hugo Street, Site archéologique de Carthage, Tunisia

Abstract: The purpose of the paper is to study the effect of political connections on collateralisation and debt access. The study is carried out on a sample of Tunisian firms on the period 2007-2012. In the first step, we have taken into consideration an aggregate measure of collateral which is fixed assets. Results show that only long-term debt can be covered by fixed assets owned by connected firms. Then, in a second step, we have been studying the collateral liquidity through three components: lands, buildings and machineries and equipment. The major finding is that politically connected firms were able to gain access to debt without sufficient liquid collaterals.

Keywords: debt; political connections; collateral liquidity.

DOI: 10.1504/IJMED.2019.097803

International Journal of Management and Enterprise Development, 2019 Vol.18 No.1/2, pp.107 - 118

Received: 26 Jan 2018
Accepted: 25 Apr 2018
Published online: 11 Feb 2019 *

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