Political connections and banking industry performance: a cross-country analysis
Political connections and banking industry performance: a cross-country analysis
This study examines the association between political connectiveness in the banking sector and the aggregate profitability of the sector. Evidence from an international sample of 59 countries points towards a positive effect. This finding holds while controlling for a variety of country-level characteristics, such as macroeconomic conditions, economic freedom, quality of institutions, government ownership of banks, banking sector characteristics and income level. Moreover, the positive relationship persists when using alternative sample specifications and proxies of political connectedness. Further analysis shows that this relationship is moderated by the control of corruption and the rule of law. In more detail, the results show that political connections are less valuable in countries with a better institutional environment along these dimensions.
Papadimitri, Panagiota
b7edf14e-3b00-4317-a6ce-8741b593d5b0
Pasiouras, Fotios
60b58a14-a144-46e7-ad07-34b460e674f5
Papadimitri, Panagiota
b7edf14e-3b00-4317-a6ce-8741b593d5b0
Pasiouras, Fotios
60b58a14-a144-46e7-ad07-34b460e674f5
Papadimitri, Panagiota and Pasiouras, Fotios
(2022)
Political connections and banking industry performance: a cross-country analysis.
Review of Corporate Finance.
(In Press)
Abstract
This study examines the association between political connectiveness in the banking sector and the aggregate profitability of the sector. Evidence from an international sample of 59 countries points towards a positive effect. This finding holds while controlling for a variety of country-level characteristics, such as macroeconomic conditions, economic freedom, quality of institutions, government ownership of banks, banking sector characteristics and income level. Moreover, the positive relationship persists when using alternative sample specifications and proxies of political connectedness. Further analysis shows that this relationship is moderated by the control of corruption and the rule of law. In more detail, the results show that political connections are less valuable in countries with a better institutional environment along these dimensions.
Text
PP PolCon 2023
- Accepted Manuscript
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Accepted/In Press date: 20 September 2022
Identifiers
Local EPrints ID: 473629
URI: http://eprints.soton.ac.uk/id/eprint/473629
PURE UUID: 42c6c84a-f7ba-44af-957a-e2959dd80252
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Date deposited: 25 Jan 2023 17:42
Last modified: 21 Sep 2024 04:01
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Contributors
Author:
Panagiota Papadimitri
Author:
Fotios Pasiouras
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