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The Impact of Electoral Factors on Commercial Banks in CEE Countries

Author

Listed:
  • Jackowicz, Krzysztof

    (Kozminski University)

  • Kowalewski, Oskar

    (Warsaw School of Economics)

  • Koslowski, Lukasz

    (Bank Gospodarki Zywnosciowej)

Abstract

This study analyses the impact of political factors on commercial banks' behaviour and performance in 11 CEE countries between 1992 and 2008. Using a unique dataset of commercial banks and electoral factors, we find that state-owned banks show significantly smaller net interest income ratios during the years of parliamentary elections and during preceding years. The decrease in profitability of state-owned banks is caused primarily by lower interest rates charged on loans. In contrast, we document that the results concerning political determinants of credit growth are inconclusive. Hence, this study supports, to some extent, the view that state-owned banks constitute a tool serving political goals in CEE countries.

Suggested Citation

  • Jackowicz, Krzysztof & Kowalewski, Oskar & Koslowski, Lukasz, 2011. "The Impact of Electoral Factors on Commercial Banks in CEE Countries," Working Papers 11-02, University of Pennsylvania, Wharton School, Weiss Center.
    • Handle: RePEc:ecl:upafin:11-02
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    File URL: http://fic.wharton.upenn.edu/fic/papers/11/11-02.pdf
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    Cited by:

    1. Hasan, Iftekhar & Jackowicz, Krzysztof & Kowalewski, Oskar & Kozłowski, Łukasz, 2013. "Market discipline during crisis: Evidence from bank depositors in transition countries," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5436-5451.
    2. MVK, Jagannath & Maitra, Debasish, 2023. "Do election cycles, political stability, and government effectiveness matter for the risk of banks? Evidence from Indian banks," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    3. Chen, Pei-Fen & Liu, Ping-Chin, 2013. "Bank ownership, performance, and the politics: Evidence from Taiwan," Economic Modelling, Elsevier, vol. 31(C), pages 578-585.

    More about this item

    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

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