Corporate Governance and Access to Finance - ESBG

In this case, the country component is totally responsible for the negativecorrelation since the sign of the correlation between the specific componentand the average loan size is positive (see Charts 12.1 and 12.2). It is notintuitive why the country Corporate Governance index presents theexpected sign whereas the specific Corporate Governance index presentsthe opposite sign. Since these results are based on a very small sample ofWSBI members and this negative relationship can be explained by justtwo observations, we do not attach much reliability to these results.Chart 12. Corporate Governance components and Access to FinanceSpecific components andaverage loan sizeCountry components andaverage loan sizeSource: Own elaboration. Afi, Analistas Financieros Internacionales.The tendency line helps to visualise the correlation between the Specific Corporate Governanceindex and Access to Finance measured as the average loan size.Despite the above mentioned scepticism on the interpretation of thecorrelations between Corporate Governance and loan size as themeasure of Access to Finance, it is interesting to identify individualcomponents of the specific Corporate Governance index which wouldinduce a negative relationship with the average size of the loans: (i) theexistence of an external audit, a rating from an agency and/or an internalCorporate Governance Code and (ii) the Regulatory Quality index. It isreassuring to find that these are the very same components whichgenerated the bulk of the negative correlation in the case of the averagedeposit indicator, which points to a certain robustness of the results.87