Public procurement and bank lending

Burger, Anže (author), Marinč, Matej (author), Polanec, Sašo (author), Kotnik, Patricia (author)

This article unveils that government is intertwined with banking through a hitherto underexplored channel—through public procurement. On a comprehensive firm-level dataset that combines public procurement and accounting data, we apply the difference-in-differences method to show that treated firms that secure a public procurement contract can strengthen their bank borrowing terms. Treated firms obtain a greater amount of bank funding and a higher share of long-term funding at lower interest rates compared to the control firms. The impact on bank lending exceeds the positive impact due to higher revenues and suggests a positive non-revenue channel of public procurement.

• Language: English
• Keywords: public orders, banking, analysis, public procurement, government procurement, lending, synthetic control method, causal mediation analysis
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: FDV - Faculty of Social Sciences; EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2024
• Number of pages: 10 str.
• Numbering: Vol. 66, art. 105623
• PID: 20.500.12556/RUL-158970
• UDC: 336
• ISSN on article: 1544-6123
• DOI: 10.1016/j.frl.2024.105623
• COBISS.SI-ID: 198109955
• Publication date in RUL: 24.06.2024

Record is a part of a journal

• Title: Finance research letters
• Publisher: Elsevier
• ISSN: 1544-6123
• COBISS.SI-ID: 518506777

Licences

• License: CC BY-NC-ND 4.0, Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
• Link: http://creativecommons.org/licenses/by-nc-nd/4.0/
• Description: The most restrictive Creative Commons license. This only allows people to download and share the work for no commercial gain and for no other purposes.

Secondary language

• Language: Slovenian
• Keywords: javna naročila, bančništvo, analiza