Interlocking directorates, access to credit, and business performance in Chile during early industrialization

Matías Braun*, Ignacio Briones, Gonzalo Islas

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


How do businessmen counteract credit constraints when the financial market does not provide adequate external financing? Based on novel primary corporate data, network techniques and regression analysis, we explore the role of interlocking directorates with banks as a way for companies to face this limitation in early twentieth century Chile. Since both linkages and credit were unregulated, this setting provides us with a quasi-natural laboratory to test the role of interlocking directorates as a device for dealing with credit constraints. The paper finds that firms connected to banks had better access to credit as reflected in higher leverage ratios, had higher valuations, and better chances of surviving. These facts show that business networks, through interlocking directorates, can play a valuable role for companies in dealing with an environment of financial constraints.

Original languageEnglish
Pages (from-to)381-388
Number of pages8
JournalJournal of Business Research
StatePublished - Dec 2019
Externally publishedYes

Bibliographical note

Funding Information:
The authors gratefully acknowledge the suggestions to earlier versions of this paper made by participants at PUC Clio Conference, SECHI annual conference, SMLA Conference and two anonymous referees. The authors alone are responsible for all limitations and errors that made relate to the paper. Mat?as Braun wishes to thank the Latin American Centre at The University of Oxford, where part of the research that led to this paper was conducted while he was a visiting fellow there. This research did not receive any specific grant from funding agencies in the public, commercial, or not for profit sectors.

Publisher Copyright:
© 2017 Elsevier Inc.


  • Business history
  • Credit constraints
  • Firm performance
  • Interlocking directorates
  • Latin America


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