Do political connections matter for bank efficiency in times of crisis?

Emili Tortosa-Ausina, Omneya Abdelsalam, Sabur Mollah, Ahmed Elmasry

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Abstract

Do political connections affect bank efficiency during crises? This study addresses this question by adopting a two-stage approach that performs a quantile regression analysis on a unique dataset of listed banks in a region that has witnessed both financial and political crises, namely the Middle East and North Africa. Our results show that political connections are a driving force behind bank inefficiency. We find that the least efficient banks have the most significant association with political connections, thus supporting the bailout theory. We also find that political connections influenced the efficiency of banks during the financial crisis, but not during the regional political crisis. Our results provide new evidence on the applicability of established political connection theories during political turmoil.
Original languageEnglish
Pages (from-to)(In-Press)
Number of pages24
JournalInternational Journal of Finance and Economics
Volume(In-Press)
Early online date23 Jan 2024
DOIs
Publication statusE-pub ahead of print - 23 Jan 2024

Bibliographical note

This is an Open Access article distributed under the terms of the Creative
Commons Attribution License (http://creativecommons.org/licenses/by/4.0/),
which permits unrestricted use, distribution, and reproduction in any medium,
provided the original work is properly cited.

Keywords

  • banks
  • efficiency
  • crisis
  • political connections
  • data envelopment
  • quantile regression
  • data envelopment analysis

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