Abstract

http://ssrn.com/abstract=431340
 
 

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Political Determinants of Commercial Bank Behavior in Latin America: The Case of Bolivia


Ali M. Kutan


Southern Illinois University at Edwardsville

José L. Cespedes


Universidad Catolica Boliviana

August 2003


Abstract:     
Research on the determinants of commercial bank behavior has generally focused on financial and economic variables, ignoring political factors. Extending an earlier study by Brock and Suarez (2000) [Journal of Development Economics], we provide empirical evidence from Bolivia's recent experience that political events are important determinants of bank behavior. We find that news about the zero coca policy initiated in 1998, cancer news regarding the former president Banzer in 2001, and the recent 2002 political election, which was tied to the coca war, are all associated with changes in commercial bank spreads and deposits, affecting bank profits and growth. Our results are consistent with cross section studies that find that political instability contributes the bid-ask spread in both industrial and developing countries' asset markets.

Number of Pages in PDF File: 31

Keywords: Political risk, Bank spreads

JEL Classification: F2, G2

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Date posted: August 27, 2003  

Suggested Citation

Kutan, Ali M. and Cespedes, José L., Political Determinants of Commercial Bank Behavior in Latin America: The Case of Bolivia (August 2003). Available at SSRN: http://ssrn.com/abstract=431340 or http://dx.doi.org/10.2139/ssrn.431340

Contact Information

Ali M. Kutan (Contact Author)
Southern Illinois University at Edwardsville ( email )
Department of Economics and Finance AH-3141
Edwardsville, IL 62026-1102
United States
618-650-3473 (Phone)
618-650-3047 (Fax)
HOME PAGE: http://www.siue.edu/business/economicsandfinance/facpages/Kutan.shtml
José L. Cespedes
Universidad Catolica Boliviana ( email )
La Paz
Bolivia
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