Political connections are a worldwide phenomenon, but little is known about the capability differentials in using them. We argue that business group affiliates are capable of extracting more value from political connections than non-affiliates. We use political contributions to proxy for firm connections. A selection-corrected fixed effects model was fitted using a panel sample of 778 firm-election observations for three major elections in Brazil. We find support that group affiliation moderates the effect of political connections on preferential lending. We also find that local business groups are more capable of using their political capability than foreign groups.
