Government intervention and bank markups: Lessons from the global financial crisis for the COVID-19 crisis

Brandon Tan, Deniz Igan, Maria Martinez Peria, Nicola Pierri and Andrea Presbitero

Journal of Banking & Finance, 2021, vol. 133, issue C

Abstract: The COVID-19 pandemic could result in large government interventions in the banking industry. To shed light on the possible consequences on markups, we rely on the experience of the Global Financial Crisis and exploit granular data on government interventions in more than 800 banks across 27 countries between 2007 and 2017. Using a multivariate matching method, we find no evidence of an increase in markups. Interventions—especially longer and larger ones—have no significant impact on prices but they increase costs, mostly because of higher loan impairment charges, lowering markups.

Keywords: Banks; Government intervention; Markups; Lerner index (search for similar items in EconPapers)
JEL-codes: D40 G21 H81 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:133:y:2021:i:c:s0378426621002715

DOI: 10.1016/j.jbankfin.2021.106320

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