Government support and bank performance during the 2007–2008 financial crisis

Yi-Ling Chen, Hsiu-I Ting and Ming-Chun Wang

The North American Journal of Economics and Finance, 2021, vol. 55, issue C

Abstract: Though previous studies suggest a state participation has a negative impact on banks, this paper highlights the potential benefits of state ownership for confidence and stability in the post-crisis period that can outweigh the inefficiencies and potential for corruption of political intervention. We find that the state guarantees are valuable during the crisis. The negative (positive) relation between state ownership and bank profitability (risk) is mitigated in the post-crisis period. Financially troubled banks that receive a transfer payment or capital injection experience improved performance during the post-bailout period.

Keywords: Financial crisis; Government support hypothesis; Bank performance; Ownership structure; Bailout (search for similar items in EconPapers)
JEL-codes: G01 G21 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:55:y:2021:i:c:s1062940820301911

DOI: 10.1016/j.najef.2020.101301

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