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Political connections and economic policy uncertainty: A global evidence

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  • Tee, Chwee-Ming
  • Hooy, Chee-Wooi

Abstract

Crony capitalism literature finds that political connections are either positively or negatively associated with various firm outcomes. However, the relationship between political connections and country level variables remains under-explored. Motivated by this gap of knowledge, our study investigates the relationship between political connections around the world and economic policy uncertainty (EPU). Our evidence suggests that the likelihood for political connections to be established is higher in countries with high EPU compared to those with low EPU. Additionally, the findings also indicate that heightened state of EPU mitigates the ability of strong institutional governance to reduce political connections.

Suggested Citation

  • Tee, Chwee-Ming & Hooy, Chee-Wooi, 2023. "Political connections and economic policy uncertainty: A global evidence," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005190
    DOI: 10.1016/j.frl.2022.103340
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    More about this item

    Keywords

    Political connections; Politically connected firms; Economic policy uncertainty; Institutional governance;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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