Bank ownership, performance, and the politics: Evidence from Taiwan

Pei-Fen Chen and Ping-Chin Liu

Economic Modelling, 2013, vol. 31, issue C, 578-585

Abstract: This paper investigates the effects of politics on the performances of financial institutions in Taiwan over the period from 1994 through 2009 using the two-stage generalized method of moments approach. We argue that politics and financial institutions are related and this relationship varies with the ownership of financial institutions. Our main findings are, firstly, during election years, the private financial institutions earned higher ROA and loan growth than the government- and foreign-owned. Secondly, government-owned institutions are not affected by current elections for all measures of performance, while foreign institutions significantly earned lower ROA, higher interest margin, and spent higher overhead costs. The finding that lendings of government-owned institutions are no longer subject to political pressures across time implies partial success of financial reforms in Taiwan.

Keywords: Financial institutions; Election; Bank ownership; Bank performance (search for similar items in EconPapers)
JEL-codes: D21 G21 G23 G32 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:31:y:2013:i:c:p:578-585

DOI: 10.1016/j.econmod.2012.12.006

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