Political patronage in Ukrainian banking1 |
| |
| Authors: | Christopher F Baum Mustafa Caglayan Dorothea Schäfer Oleksandr Talavera |
| |
| Institution: | 1. Department of Economics, Boston College, Chestnut Hill, MA, USA and Department of Innovation, Industry and Services, DIW Berlin, Germany. E‐mail: baum@bc.edu;2. Department of Economics, University of Sheffield, Sheffield, UK. E‐mail: m.caglayan@sheffield.ac.uk;3. Department of Innovation, Industry and Services, DIW Berlin, Germany. E‐mail: dschaefer@diw.de;4. Aberdeen Business School, Robert Gordon University, Aberdeen, UK and Kyiv School of Economics, Ukraine. E‐mail: otalavera@eerc.kev.ua |
| |
| Abstract: | This paper empirically investigates the link between political patronage and bank performance for Ukraine during 2003Q3–2005Q2. 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. |
| |
| Keywords: | G32 G38 Political patronage Ukraine banking capitalization interest rate margin |
|
|
