Politicians and Banks: Political Influences on Government-Owned Banks in Emerging Markets
Journal of Financial Economics, Vol. 77, pp. 453-479, August 2005
Government ownership of banks is very common in countries other than the United States. This paper provides cross-country, bank-level empirical evidence about political influences on these banks. It shows that government-owned banks increase their lending in election years relative to private banks. This effect is robust to controlling for country-specific macroeconomic and institutional factors as well as bank-specific factors. The increase in lending is about 11% of a government-owned bank's total loan portfolio or about 0.5% of the median country's GDP per election per government-owned bank.
Keywords: Corporate Governance, Political Economy, Corruption, State-Owned Enterprises, Electoral Cycle
JEL Classification: G21, G32, D72, D73Accepted Paper Series
Date posted: October 26, 2005
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