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Political patronage in Ukranian banking

  • Christopher F. Baum

    ()

    (Boston College
    DIW Berlin)

  • Mustafa Caglayan

    (University of Sheffield)

  • Dorothea Schäfer

    ()

    (DIW Berlin)

  • Oleksandr Talavera

    ()

    (DIW Berlin)

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 margins. The gap between affiliated banks' and non-affiliated banks' capitalization ratios, is narrowing over time. Parliamentary deputies might use financial institutions to achieve political goals which reduces their banks' performance.

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Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 657.

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Length: 19 pages
Date of creation: 14 Feb 2007
Date of revision: 13 Feb 2008
Publication status: published, Economics of Transition, 16(3), 2008, 537-557; earlier version published (in German) as "Ukrainische Banken: Politische Patronage von Bedeutung", Wochenbericht Nr. 23/2007, DIW Berlin, pp. 367-371.
Handle: RePEc:boc:bocoec:657
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  1. Rafael La Porta & Florencio Lopez-deSilanes & Andrei Shleifer, 2000. "Government Ownership of Banks," Harvard Institute of Economic Research Working Papers 1890, Harvard - Institute of Economic Research.
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  15. Shane A. Johnson, 2003. "Debt Maturity and the Effects of Growth Opportunities and Liquidity Risk on Leverage," Review of Financial Studies, Society for Financial Studies, vol. 16(1), pages 209-236.
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