Democracy and Banking Stability: Is the Relationship U-Shaped?

Mohamed Sami Ben Ali () and Sami Ben Mim ()
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Mohamed Sami Ben Ali: Qatar University
Sami Ben Mim: IHEC, LaREMFiQ, University of Sousse

Journal of the Knowledge Economy, 2023, vol. 14, issue 4, No 35, 4426-4448

Abstract: Abstract This study addresses the impact of democracy on the stability of the banking system for a sample of 114 countries over the period 2000–2017. Our findings offer strong evidence for a U-shaped relationship between democracy and banking stability. Results also show that the way democratic institutions impact banking stability is highly dependent on their ability to implement effective anti-corruption policies. Controlling for countries’ income levels reveals that not all high-income countries are necessarily enjoying the positive effects of democracy on banking stability.

Keywords: Democracy; Banking crisis; SGMM; Nonlinearity; O17; P48; D73; H12; G33 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13132-022-01063-1

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