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Credit to government and banking sector performance

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  • Hauner, David

Abstract

The impact of credit to government on three aspects of banking sector performance - its deepening over time, profitability, and efficiency - is examined for 142 countries. Country regressions suggest a sizeable negative effect of credit to government on bank deepening in developing countries, but no impact in advanced economies. Bank regressions find that credit to government raises the profitability but reduces the efficiency of banks in developing countries; in advanced economies, there appears to be no impact on profitability but a positive one on efficiency.

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  • Hauner, David, 2008. "Credit to government and banking sector performance," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1499-1507, August.
    • Handle: RePEc:eee:jbfina:v:32:y:2008:i:8:p:1499-1507
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    3. Ayadi, Rym & Arbak, Emrah & Ben-Naceur, Sami & De Groen, Willem Pieter, 2013. "Determinants of Financial Development across the Mediterranean," CEPS Papers 7770, Centre for European Policy Studies.
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    5. Sepideh Kaffash & Marianna Marra, 2017. "Data envelopment analysis in financial services: a citations network analysis of banks, insurance companies and money market funds," Annals of Operations Research, Springer, vol. 253(1), pages 307-344, June.
    6. Poonam Gupta & Kalpana Kochhar & Sanjaya Panth, 2015. "Bank ownership and the effects of financial liberalization: evidence from India," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 8(1), pages 109-138, April.
    7. Yang, Hsin-Feng & Liu, Chih-Liang & Yeutien Chou, Ray, 2020. "Bank diversification and systemic risk," The Quarterly Review of Economics and Finance, Elsevier, vol. 77(C), pages 311-326.
    8. Ayadi, Rym & Arbak, Emrah & Ben-Naceur, Sami & De Groen, Willem Pieter, 2013. "Benchmarking the Financial Sector in the Southern and Eastern Mediterranean Countries and Projecting 2030 Financial Sector Scenarios," CEPS Papers 7868, Centre for European Policy Studies.
    9. Hauner, David, 2009. "Public debt and financial development," Journal of Development Economics, Elsevier, vol. 88(1), pages 171-183, January.
    10. Janda, Karel & Kravtsov, Oleg, 2017. "Time-varying Effects of Public Debt on the Financial and Banking Development in the Central and Eastern Europe," MPRA Paper 77325, University Library of Munich, Germany.
    11. Ramez Abubakr Badeeb & Hooi Hooi Lean, 2017. "The Determinants of Financial Development in the Republic of Yemen: Evidence from the Principal Components Approach," Capital Markets Review, Malaysian Finance Association, vol. 25(2), pages 32-48.
    12. Azmat Gani & Tareq Rasul, 2020. "The Institutional Quality Effect on Credits Provided by the Banks," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(3), pages 249-258, August.
    13. Awdeh, Ali, 2011. "The Determinants of Bank Profitability and the Effects of Foreign Ownership," MPRA Paper 119117, University Library of Munich, Germany.

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