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I’ve Got the Power: Mapping Connections between Lebanon’s Banking Sector and the Ruling Class

Author

Listed:
  • Jad Chaaban

    (American University of Beirut)

Abstract

This paper explores the extent to which local commercial banks in Lebanon are linked to the country’s political class, and how this impacts their efficiency and sovereign risk exposure. By compiling detailed ownership and political affiliation data on the major 20 commercial banks in 2014, the paper shows that as much as 18 out of the 20 banks have major shareholders linked to political elites, and 43% of assets in the sector could be attributed to political control. “Crony capital” within the banking sector is also shown to impact the quality of banks’ loans, and their exposure to public debt.

Suggested Citation

  • Jad Chaaban, 2016. "I’ve Got the Power: Mapping Connections between Lebanon’s Banking Sector and the Ruling Class," Working Papers 1059, Economic Research Forum, revised 10 2016.
    • Handle: RePEc:erg:wpaper:1059
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    References listed on IDEAS

    as
    1. Caprio, Gerard & Laeven, Luc & Levine, Ross, 2007. "Governance and bank valuation," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 584-617, October.
    2. Filippo De Marco & Marco Macchiavelli, 2016. "The Political Origin of Home Bias: The Case of Europe," Finance and Economics Discussion Series 2016-060, Board of Governors of the Federal Reserve System (U.S.).
    3. Ghassan Dibeh, 2005. "The Political Economy of Postwar Reconstruction in Lebanon," WIDER Working Paper Series RP2005-44, World Institute for Development Economic Research (UNU-WIDER).
    4. Morck, Randall & Deniz Yavuz, M. & Yeung, Bernard, 2011. "Banking system control, capital allocation, and economy performance," Journal of Financial Economics, Elsevier, vol. 100(2), pages 264-283, May.
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