Elections, political competition and bank failure

Liu, Wai‐Man; Ngo, Phong T. H.

doi:10.1016/j.jfineco.2014.02.005

Cited by 117 publications

(49 citation statements)

References 43 publications

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“…A positive relationship is expected between GDP growth and business opportunities for banks and thus, the scope and boundaries of banks (Albertazzi & Gambacorta, 2009; Bernanke, Gertler, & Gilchrist, 1999; Goddard et al, 2011). We have included a dummy variable for the years 2007 and 2008, which indicate the beginning of the most recent economic crisis ( Crisis ; Liu & Ngo, 2014; Spokeviciute, Keasey, & Vallascas, 2019). Table 2 shows the descriptive statistics.…”

Section: Methodsmentioning

confidence: 99%

Using reputation for corporate sustainability to tackle banks digitalization challenges

2020

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The new landscape in the financial sector, characterized by fierce competition and the entrance of new technological players, has forced banks to speed up their digital transformation. However, for banks, digitalization entails challenges that can hinder the potential benefits and compromise their survival. In this context, we argue that the reputation generated by corporate sustainability (RCS) may offset these digitalization drawbacks. In particular, we find that the combination of RCS and digitalization facilitates in transforming the organizational nature of banks by simultaneously narrowing their boundaries and expanding their scope. We empirically confirm our hypotheses by analyzing a panel of 110 multinational banks from developed countries.

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Section: Methodsmentioning

confidence: 99%

Using reputation for corporate sustainability to tackle banks digitalization challenges

2020

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“…This paper joins several recent studies that examine the economic impact of political uncertainty using gubernatorial election data. Liu, Phong, and Ngo (2014) document that bank failure is lower during gubernatorial elections in the United States. Gao and Qi (2013) find that municipal bond yields increase, and Jens (2016) shows that corporate investment is lower during such times.…”

Section: Introductionmentioning

confidence: 99%

Political Uncertainty and IPO Activity: Evidence from U.S. Gubernatorial Elections

Çolak¹,

Durnev²,

Qian³

2017

J. Financ. Quant. Anal.

369

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We analyze initial public offering (IPO) activity under political uncertainty surrounding gubernatorial elections in the United States. There are fewer IPOs originating from a state when it is scheduled to have an election. To establish identification, we develop a neighboring-states method that uses bordering states without elections as a control group. The dampening effect of elections on IPO activity is stronger for firms with more concentrated businesses in their home states, firms that are more dependent on government contracts (particularly state contracts), and harder-to-value firms. This dampening effect is related to lower IPO offer prices (hence, higher costs of capital) during election years.

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“…Several finance studies have documented that politically connected banks are more likely to receive support from the government in times of economic distress (Blau, Brough, &Thomas, 2013); thus these banks are more likely to engage in risk taking activities (Kostovesky, 2015). Bank failure is about 45% less likely in the year leading up to an election, perhaps to avoid the political costs associated with failure (Liu & Ngo, 2014). Moreover, Chaney et al (2011) have found that politically connected firms with poor accounting information do not suffer higher cost of debt, consistent with the argument that political connections mitigate the costs of poor accounting information.…”

Section: Introductionmentioning

confidence: 64%

Do Political Connections Affect Bank Loan Loss Provision Reliability?

Zhao¹

2016

AFR

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This study examines whether political connections affect the loan loss provision (LLP) quality of financial institutions, in particular LLP reliability. Using a geography-based measure, I document that politically connected banks have more reliable LLP than do non-connected banks, consistent with the fact that politically connected banks are subject to more extensive controls than non-politically connected banks. Thus, political connections are more likely to be associated with reliable LLP. In addition, I document that the effect of improved political connections on reliability is more pronounced in the subsamples of banks with investment grades relative to the subsamples of banks with noninvestment grades. Finally, the effect of political connections on reliability is more pronounced in the subsample of banks in the expansion periods relative to the recession periods. These findings are consistent with the argument that connected banks did not engage in improving LLP quality for predicting future loan defaults as they might have relied on receiving support from the government in lieu of expending their resources.

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Elections, political competition and bank failure

Cited by 117 publications

References 43 publications

Using reputation for corporate sustainability to tackle banks digitalization challenges

Using reputation for corporate sustainability to tackle banks digitalization challenges

Political Uncertainty and IPO Activity: Evidence from U.S. Gubernatorial Elections

Do Political Connections Affect Bank Loan Loss Provision Reliability?

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