Banking system control, capital allocation, and economy performance☆

Mørck, Randall; Yavuz, M. Deniz; Yeung, Bernard

doi:10.1016/j.jfineco.2010.12.004

Cited by 86 publications

(63 citation statements)

References 167 publications

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“…These historical accounts are also corroborated by econometric evidence. For instance, Morck et al (2011) observe a less efficient allocation of capital in countries whose banking systems are controlled by wealthy families. Moreover, family control of banks also appears to be related with slower economic growth and greater financial instability.…”

Section: Background and Empirical Methodsmentioning

confidence: 99%

Household wealth inequality, entrepreneurs’ financial constraints, and the great recession: evidence from the Kauffman Firm Survey

2017

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We empirically test if household wealth inequality affects borrowing constraints of young entrepreneurs. We construct a measure of wealth inequality at the US county level based on the distribution of financial rents in 2004. We find that in more unequal areas, entrepreneurs are less likely to apply for a loan fearing that their applications will be turned down and they use more of their own funds to finance their ventures. In more unequal areas, the number of bank establishments per capita is lower, this effect being stronger during the 2007-2008 financial crisis.

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Section: Background and Empirical Methodsmentioning

confidence: 99%

Household wealth inequality, entrepreneurs’ financial constraints, and the great recession: evidence from the Kauffman Firm Survey

2017

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“…We experiment with many potential measures of elites (see e.g., Angeles, 2007;Angeles and Neanidis, 2009). Using variables that capture the presence of an influential elite as in Barth, Caprio, and Levine (2006) and Morck, Yavuz, and Yeung (2011) we find that the correlations between these measures and the supervisory power index are very low and statistically insignificant. 11 In a previous version of this paper we also used a panel VAR approach, in the fashion of Love and Zichinno (2006) and Holtz-Eakin, Newey, and Rosen (1988) to identify the isolated impact of bank regulations on inequality.…”

Section: Empirical Findingsmentioning

confidence: 99%

Bank Regulations and Income Inequality: Empirical Evidence*

2013

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This paper provides cross-country evidence that variations in bank regulatory policies result in differences in income distribution. In particular, the overall liberalization of banking systems decreases income inequality significantly. However, this effect becomes insignificant for countries with low levels of economic and institutional development and for market-based economies. Among liberalization policies, credit and interest rate controls have the most significant negative effect on inequality. Privatizations and liberalization of international capital flows also decrease income inequality; the latter also increases the income share of the relatively poor. In contrast, liberalization of securities markets increases income inequality substantially. These findings show that bank regulations have a significant effect on real economic outcomes as well as financial stability.

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“…2 Whereas the impact of political elite rent seeking has been studied in relation to e.g. foreign aid (Asiedu et al, 2009;Svensson, 2000), efficiency in the banking sector (Morck et al, 2011), and the onset of financial crisis (Wei and Wu, 2002;Johnson, 2009;Mishkin, 1996;Reinhart and Rogoff, 2009), the impact of rent seeking behaviour on investment has not been extensively explored using cross-country analysis. 3 A revived interest on the impact of elite rent seeking in explaining the variation of economic growth is due to the contribution of North et al (2009) who investigate the role of elite behaviour in regulating economic activity and social structure.…”

Section: Introductionmentioning

confidence: 99%