Does State Ownership of Banks Matter? Russian Evidence from the Financial Crisis

Journal of Emerging Market Finance Vol 17 (2), pp.1-38

40 Pages Posted: 1 Oct 2014 Last revised: 25 Aug 2018

See all articles by Denis Davydov

Denis Davydov

University of Vaasa - Department of Accounting and Finance

Date Written: March 22, 2016

Abstract

This paper examines the effects of state ownership and government interventions on lending behavior and capitalization of banks over the period 2005-2011. Using data from the highly state-influenced Russian banking sector, it is documented that the relationship between state ownership and lending is nonlinear. While overall loan growth decreased and interest rates rose, it is found that fully state-controlled banks increased lending and charged lower interest rates during the crisis of 2008-2010. Moreover, fully state-owned and state-supported banks demonstrated counter-cyclical lending behavior during the crisis. However, while state-owned banks were better protected against asset default, there is a weak evidence to suggest that government interventions may result in increased riskiness of banks.

Keywords: bank lending, state ownership, privatization, financial crisis, government interventions

JEL Classification: G01, G21, G28, G32, O16

Suggested Citation

Davydov, Denis, Does State Ownership of Banks Matter? Russian Evidence from the Financial Crisis (March 22, 2016). Journal of Emerging Market Finance Vol 17 (2), pp.1-38. Available at SSRN: https://ssrn.com/abstract=2503659 or http://dx.doi.org/10.2139/ssrn.2503659

Denis Davydov (Contact Author)

University of Vaasa - Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland
+358 6 3248 268 (Phone)

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