TY  - JOUR
AU  - Johnson,Simon
AU  - Mitton,Todd
TI  - Cronyism and Capital Controls: Evidence from Malaysia
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8521
PY  - 2001
Y2  - October 2001
UR  - http://www.nber.org/papers/w8521
L1  - http://www.nber.org/papers/w8521.pdf
N1  - Author contact info:
Simon Johnson
MIT Sloan School of Management
100 Main Street, E52-562
Cambridge, MA 02142
Tel: 617/290-9618
Fax: 617/253-2660
E-Mail: sjohnson@mit.edu

Todd Mitton
Marriott School
Brigham Young University
684 TNRB
Provo, UT 84602
Tel: 801/422-1763
E-Mail: todd.mitton@byu.edu
AB  - The initial impact of the Asian financial crisis in Malaysia reduced the expected value of government subsidies to politically favored firms. Of the estimated $60 billion loss in market value for politically connected firms from July 1997 to August 1998, roughly 9% can be attributed to the fall in the value of their connections. Firing the Deputy Prime Minister and imposing capital controls in September 1998 primarily benefited firms with strong ties to Prime Minister Mahathir. Of the estimated $5 billion gain in market value for Mahathir-connected firms during September 1998, approximately 32% was due to the increase in the value of their connections. The evidence suggests Malaysian capital controls provided a screen behind which favored firms could be supported.
ER  -