IDEAS home Printed from https://ideas.repec.org/a/eee/jbfina/v34y2010i11p2709-2719.html
   My bibliography  Save this article

Parliamentary election cycles and the Turkish banking sector

Author

Listed:
  • Baum, Christopher F.
  • Caglayan, Mustafa
  • Talavera, Oleksandr

Abstract

This paper analyzes the effects of parliamentary election cycles on the Turkish banking system. Using annual bank-level data representing all banks in Turkey during 1963-2007, we present evidence of meaningful differences in the structure of bank assets, liabilities and financial performance across different stages of the parliamentary election cycle. However, we find that government-owned banks' behavior does not meaningfully differ from that of either domestic and foreign-owned private-sector banks before, during or after elections. Our estimates also show that government-owned banks underperform both domestic and foreign-owned private-sector counterparts.

Suggested Citation

  • Baum, Christopher F. & Caglayan, Mustafa & Talavera, Oleksandr, 2010. "Parliamentary election cycles and the Turkish banking sector," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2709-2719, November.
  • Handle: RePEc:eee:jbfina:v:34:y:2010:i:11:p:2709-2719
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378-4266(10)00190-1
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," World Bank Economic Review, World Bank Group, vol. 13(2), pages 379-408, May.
    2. Sapienza, Paola, 2004. "The effects of government ownership on bank lending," Journal of Financial Economics, Elsevier, vol. 72(2), pages 357-384, May.
    3. Ibrahim Tutar & Aysit Tansel, 2000. "Political Business Cycles, Institutional Structure and Budget Deficits in Turkey?," Working Papers 2019, Economic Research Forum, revised 07 Jun 2000.
    4. Shawn Cole, 2009. "Fixing Market Failures or Fixing Elections? Agricultural Credit in India," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 219-250, January.
    5. Denizer, Cevdet, 2000. "Foreign entry in Turkey's banking sector, 1980-97," Policy Research Working Paper Series 2462, The World Bank.
    6. Hauner, David, 2008. "Credit to government and banking sector performance," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1499-1507, August.
    7. Erol Taymaz & Kamil Yılmaz, 2008. "Integration with the Global Economy: The Case of Turkish Automobile and Consumer Electronics Industries," Koç University-TUSIAD Economic Research Forum Working Papers 0801, Koc University-TUSIAD Economic Research Forum.
    8. Molyneux, Philip & Thornton, John, 1992. "Determinants of European bank profitability: A note," Journal of Banking & Finance, Elsevier, vol. 16(6), pages 1173-1178, December.
    9. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 2002. "Government Ownership of Banks," Journal of Finance, American Finance Association, vol. 57(1), pages 265-301, February.
    10. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    11. Craig O. Brown & I. Serdar Dinç, 2005. "The Politics of Bank Failures: Evidence from Emerging Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1413-1444.
    12. repec:hrv:faseco:30747188 is not listed on IDEAS
    13. Saunders, Anthony & Schumacher, Liliana, 2000. "The determinants of bank interest rate margins: an international study," Journal of International Money and Finance, Elsevier, vol. 19(6), pages 813-832, December.
    14. Micco, Alejandro & Panizza, Ugo & Yanez, Monica, 2007. "Bank ownership and performance. Does politics matter?," Journal of Banking & Finance, Elsevier, vol. 31(1), pages 219-241, January.
    15. Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2005. "Bank performance, efficiency and ownership in transition countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 31-53, January.
    16. Berger, Allen N. & Hasan, Iftekhar & Zhou, Mingming, 2009. "Bank ownership and efficiency in China: What will happen in the world's largest nation?," Journal of Banking & Finance, Elsevier, vol. 33(1), pages 113-130, January.
    17. Dinc, I. Serdar, 2005. "Politicians and banks: Political influences on government-owned banks in emerging markets," Journal of Financial Economics, Elsevier, vol. 77(2), pages 453-479, August.
    18. James R. Barth & Gerard Caprio Jr. & Ross Levine, 2001. "Banking Systems around the Globe: Do Regulation and Ownership Affect Performance and Stability?," NBER Chapters, in: Prudential Supervision: What Works and What Doesn't, pages 31-96, National Bureau of Economic Research, Inc.
    19. Fraser, Donald R. & Zhang, Hao & Derashid, Chek, 2006. "Capital structure and political patronage: The case of Malaysia," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1291-1308, April.
    20. Bongini, Paola & Laeven, Luc & Majnoni, Giovanni, 2002. "How good is the market at assessing bank fragility? A horse race between different indicators," Journal of Banking & Finance, Elsevier, vol. 26(5), pages 1011-1028, May.
    21. Christopher F. Baum & Mustafa Caglayan & Dorothea Schäfer & Oleksandr Talavera, 2008. "Political patronage in Ukrainian banking1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(3), pages 537-557, July.
    22. Clarke, George R.G. & Cull, Robert & Shirley, Mary M., 2005. "Bank privatization in developing countries: A summary of lessons and findings," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 1905-1930, August.
    23. Aykut Kibritcioglu, 2005. "Banking Sector Crises and Related New Regulations in Turkey," Macroeconomics 0505006, University Library of Munich, Germany.
    24. Arena, Marco, 2008. "Bank failures and bank fundamentals: A comparative analysis of Latin America and East Asia during the nineties using bank-level data," Journal of Banking & Finance, Elsevier, vol. 32(2), pages 299-310, February.
    25. Lin, Xiaochi & Zhang, Yi, 2009. "Bank ownership reform and bank performance in China," Journal of Banking & Finance, Elsevier, vol. 33(1), pages 20-29, January.
    26. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1371-1411.
    27. Roman Matousek & Selim Dasci & Bruno S. Sergi, 2008. "The efficiency of the Turkish banking system during 2000-2005," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 1(4), pages 341-355.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Doan, Anh-Tuan & Lin, Kun-Li & Doong, Shuh-Chyi, 2020. "State-controlled banks and income smoothing. Do politics matter?," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    2. Taboada, Alvaro G., 2011. "The impact of changes in bank ownership structure on the allocation of capital: International evidence," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2528-2543, October.
    3. Mehmet Asutay & Noor Zahirah Mohd Sidek, 2021. "Political economy of Islamic banking growth: Does political regime and institutions, governance and political risks matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4226-4261, July.
    4. Christopher F. Baum & Mustafa Caglayan & Dorothea Schäfer & Oleksandr Talavera, 2008. "Political patronage in Ukrainian banking1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(3), pages 537-557, July.
    5. Elisabeth Paulet & Francesc Relano, 2018. "Chinese banking reforms in perspective: towards global alignment or national specificity?," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(3), pages 294-311, May.
    6. Jackowicz, Krzysztof & Kowalewski, Oskar & Kozłowski, Łukasz, 2013. "The influence of political factors on commercial banks in Central European countries," Journal of Financial Stability, Elsevier, vol. 9(4), pages 759-777.
    7. Micco, Alejandro & Panizza, Ugo & Yanez, Monica, 2007. "Bank ownership and performance. Does politics matter?," Journal of Banking & Finance, Elsevier, vol. 31(1), pages 219-241, January.
    8. Saibal Ghosh, 2018. "Electoral Cycles and Project Outcomes," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(2), pages 527-552, June.
    9. Bertay, Ata Can & Demirgüç-Kunt, Asli & Huizinga, Harry, 2015. "Bank ownership and credit over the business cycle: Is lending by state banks less procyclical?," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 326-339.
    10. Shen, Chung-Hua & Lin, Chih-Yung, 2012. "Why government banks underperform: A political interference view," Journal of Financial Intermediation, Elsevier, vol. 21(2), pages 181-202.
    11. Yuan, Weidi & Ouyang, Difei & Zhang, Zhicheng, 2022. "Did China’s bank ownership reform improve credit allocation?," European Economic Review, Elsevier, vol. 141(C).
    12. Ghosh, Saibal, 2016. "Political transition and bank performance: How important was the Arab Spring?," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 372-382.
    13. Udayshankar Sarkar, 2015. "A Comparative Profitability and Operating Efficiency Analysis of Public and Private Banks in Bangladesh," Quarterly Journal of Business Studies, Research Academy of Social Sciences, vol. 1(1), pages 17-23.
    14. Denis Davydov, 2018. "Does State Ownership of Banks Matter?," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 17(2), pages 250-285, August.
    15. Burki, Abid A. & Ahmad, Shabbir, 2010. "Bank governance changes in Pakistan: Is there a performance effect?," Journal of Economics and Business, Elsevier, vol. 62(2), pages 129-146, March.
    16. Cornett, Marcia Millon & Guo, Lin & Khaksari, Shahriar & Tehranian, Hassan, 2010. "The impact of state ownership on performance differences in privately-owned versus state-owned banks: An international comparison," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 74-94, January.
    17. Doan, Anh-Tuan & Lin, Kun-Li, 2022. "Bank ownership and stock price informativeness. Does politics matter?," International Review of Financial Analysis, Elsevier, vol. 79(C).
    18. Muhammad Haris & Hongxing Yao & Gulzara Tariq & Hafiz Mustansar Javaid & Qurat Ul Ain, 2019. "Corporate Governance, Political Connections, and Bank Performance," IJFS, MDPI, vol. 7(4), pages 1-37, October.
    19. Abid A. Burki & Shabbir Ahmad, 2007. "Corporate Governance Changes in Pakistan’s Banking Sector : Is There a Performance Effect?," Governance Working Papers 22251, East Asian Bureau of Economic Research.
    20. Yishu Fu & Shih-Cheng Lee & Lei Xu & Ralf Zurbruegg, 2015. "The Effectiveness of Capital Regulation on Bank Behavior in China," International Review of Finance, International Review of Finance Ltd., vol. 15(3), pages 321-345, September.

    More about this item

    Keywords

    Elections State banks Domestic banks Foreign-owned banks Loans Interest rate margin;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:34:y:2010:i:11:p:2709-2719. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/jbf .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.