Estimation of Social and Institutional Factors in Southeast Asian Corporate Financing

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In developing countries, informal socio-cultural networks as well as business conglomerates are recognized to complement the formal economic system. We estimated the influence of these informal factors on business activities of Asian companies by using the micro level data. Our estimation results suggested that informal networks functioned as substitutes for formal system when legal and economic system was underdeveloped. However, as the formal system was modernized and strengthened, the influence of the socio-cultural elements on business operations of companies weakened.