Journal
JOURNAL OF FINANCIAL ECONOMICS
Volume 77, Issue 2, Pages 453-479Publisher
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2004.06.011
Keywords
corporate governance; political economy; corruption; state-owned enterprises; electoral cycle
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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. (c) 2005 Elsevier B.V. All rights reserved.
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