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Democracy and Banking Stability: Is the Relationship U-Shaped?

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  • Mohamed Sami Ben Ali

    (Qatar University)

  • Sami Ben Mim

    (IHEC, LaREMFiQ, University of Sousse)

Abstract

This study addresses the impact of democracy on the stability of the banking system for a sample of 114 countries over the period 2000–2017. Our findings offer strong evidence for a U-shaped relationship between democracy and banking stability. Results also show that the way democratic institutions impact banking stability is highly dependent on their ability to implement effective anti-corruption policies. Controlling for countries’ income levels reveals that not all high-income countries are necessarily enjoying the positive effects of democracy on banking stability.

Suggested Citation

  • Mohamed Sami Ben Ali & Sami Ben Mim, 2023. "Democracy and Banking Stability: Is the Relationship U-Shaped?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4426-4448, December.
    • Handle: RePEc:spr:jknowl:v:14:y:2023:i:4:d:10.1007_s13132-022-01063-1
    DOI: 10.1007/s13132-022-01063-1
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