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On the Measurement and Extent of Banks’ Political Connection in the Middle East and North Africa Region

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  • Rihem Braham

    (University of Sousse)

  • Christian Peretti

    (University of Lyon)

  • Lotfi Belkacem

    (University of Sousse)

Abstract

In this article, we attempt to create a new measure of political connections specific to the Middle East and North Africa (MENA) region to examine the extent to which political patronage affects banks’ leverage and risk in this region. Principal component analysis and panel regressions are performed for a sample of banks operating in the MENA region between 2003 and 2017. The new measure incorporates different forms of political links and aspects. A comparison between two political connections variables provides evidence that our measure may outperform the use of a binary variable. Also, our results regarding the MENA region are different from previous ones, which may be explained by the failure of binary variables to capture the real impact of political connection.

Suggested Citation

  • Rihem Braham & Christian Peretti & Lotfi Belkacem, 2022. "On the Measurement and Extent of Banks’ Political Connection in the Middle East and North Africa Region," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(4), pages 606-645, December.
    • Handle: RePEc:pal:compes:v:64:y:2022:i:4:d:10.1057_s41294-021-00179-8
    DOI: 10.1057/s41294-021-00179-8
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    More about this item

    Keywords

    Political connections; Leverage; Risk; Banks; MENA region;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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