DP17300 State Ownership and Corporate Leverage Around the World

Author(s): Ralph de Haas, Sergei Guriev, Alexander Stepanov
Publication Date: May 2022
Keyword(s): Corporate Debt, Privatization, State banks, State ownership
JEL(s): D22, F36, G32, G38, H11, H81, L33
Programme Areas: Public Economics, Financial Economics, Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17300

Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show that state ownership is robustly and negatively related to corporate leverage. This relationship holds across most of the firm-size distribution, with the important exception of the largest companies, and is stronger in countries with weak political and legal institutions. A panel data analysis of privatized firms and a comparison of privatized with matched control firms yield similar qualitative and quantitative effects of state ownership on leverage.