Economics at your fingertips  

The role of political patronage in the risk-taking behaviour of banks in the Middle East and North Africa

Rihem Braham, Christian de Peretti and Lotfi Belkacem

Research in International Business and Finance, 2020, vol. 53, issue C

Abstract: In light of growing interest in the role of political patronage in banking, several issues are highlighted with regards to the performance and behaviour of politically connected banks that may differ from their non-connected peers. In this article, the effect of political patronage on bank risk-taking is examined ina sample containing 67 banks in several Middle Eastern and North African MENA countries based on a hand collected dataset of political banking connections. Although the study found no evidence that politically connected banks take more risks than their non-politically connected counterparts, which is inconsistent with the moral hazard hypothesis, a nonlinear analysis revealed an indirect effect of political connection. Contrasting results may be related to differences in institutional settings, however, political connections remain an important factor to consider in prudential banking behaviours, either implicitly or explicitly. Overall, this article discusses whether moral hazard is relevant to MENA banks and fills an existing gap in the literature on the MENA region.

Keywords: Political patronage; Banks; Risk-taking; Moral hazard; MENA; Neural network (search for similar items in EconPapers)
JEL-codes: G21 G32 G34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.ribaf.2020.101184

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2021-01-15
Handle: RePEc:eee:riibaf:v:53:y:2020:i:c:s0275531919301205