Political Patronage in Ukrainian Banking

21 Pages Posted: 16 Jun 2008

See all articles by Christopher F. Baum

Christopher F. Baum

Boston College - Department of Economics

Mustafa O. Caglayan

University of Sheffield

Dorothea Schaefer

German Institute for Economic Research (DIW Berlin); JIBS

Oleksandr Talavera

Swansea University - School of Management

Abstract

This paper empirically investigates the link between political patronage and bank performance for Ukraine during 2003-2005. We find significant differences between politically affiliated and non-affiliated banks. The data suggest that affiliated banks have significantly lower interest rate margins and increase their capitalization. Furthermore, we show that the level of activity of affiliated deputies in parliament has a positive (negative) impact on banks capitalization ratio (interest rate margin). Our findings imply, in line with the related literature, that political affiliation has important effects on banks behaviour.

Suggested Citation

Baum, Christopher (Kit) F. and Caglayan, Mustafa O. and Schaefer, Dorothea and Talavera, Oleksandr, Political Patronage in Ukrainian Banking. Economics of Transition, Vol. 16, Issue 3, pp. 537-557, July 2008, Available at SSRN: https://ssrn.com/abstract=1144910 or http://dx.doi.org/10.1111/j.1468-0351.2008.00331.x

Christopher (Kit) F. Baum (Contact Author)

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3673 (Phone)
617-552-2308 (Fax)

Mustafa O. Caglayan

University of Sheffield ( email )

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

Dorothea Schaefer

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany
+49 30 8978 9162 (Phone)
+49 30 8978 9104 (Fax)

JIBS ( email )

Jönköping, 55111
Sweden

Oleksandr Talavera

Swansea University - School of Management ( email )

Haldane Building
Singleton Park
Swansea, SA2 8PP
United Kingdom

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