Date of Graduation

Spring 5-19-2017

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Economics

First Advisor

Suparna Chakraborty

Second Advisor

Michael Jonas

Abstract

This paper examines the intrusion of political system on performance of Indian firms, employing state and constituency level financial borrowing panel data by firms from domestic banks from 2010 to 2015. Using conditional logistic and fixed effects regression models, the results suggests that firms located in regions aligned politically with the ruling party enjoy possible preferential access to financing from banks. We find average productivity efficiency loss of 2.77% in the short term as a result of politically motivated redistribution of scarce capital. These political effects are statistically robust to the inclusion of region fixed effects, time fixed effects and other socio-economic factors.

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