Politics, Investor Protection and Competition


Enrico Perotti, University of Amsterdam and UNU-MERIT

External finance is critical for less established entrepreneurs, so poor investor protection can hinder
competition. We model how lobbying by incumbents may reduce access to finance in countries where
politicians are less accountable to voters. In a broad cross-section of countries and industries, we find
that (i) the number of producers and entry rates are positively correlated with investor protection in
financially dependent sectors, and (ii) countries with more accountable political institutions have
better investor protection.

Keywords: Financial Development, Investor protection, Competition, Lobbying, Entry, Cost of Entry.

About the speaker
Enrico Perotti is Professor of International Finance at the University of Amsterdam and Professorial Fellow at UNU-MERIT. He is also Research Fellow at the Centre for Economic Policy Research (CEPR) in London and at the Davidson Institute of the University of Michigan. He is a member of the Entrepreneurship Research Group at the NBER in Cambridge, Massachussets. His research focuses on corporate finance, financial development, international finance and entrepreneurial innovation. He has written on corporate governance, strategic capital structure choices, political economy of finance, formation of innovative firms, the theory of the firm, privatization, financial transition, strategic real options, carve outs, and crosslistings. He worked as a consultant for the World Bank since 1992, and has been a visting scholar at the IMF. In 1998 he established the Amsterdam Center for International Finance (CIFRA), which organizes several series of international conferences and workshops in International Finance and Corporate Finance across the world.

Venue: Conference room, 4th floor, UNU-MERIT, Keizer Karelplein 19, Maastricht

Date: 19 November 2007

Time: 10:00 - 11:00


UNU-MERIT