Political power, economic freedom and Congress: Effects on bank performance

Gropper, Daniel M.; Jahera, John S.; Park, Jung Chul

doi:10.1016/j.jbankfin.2015.08.005

Cited by 45 publications

(25 citation statements)

References 49 publications

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“…Thus, the greater the exposure of financial system to high risk loans, the higher would be the accumulation of unpaid loans and profitability would be lower. This finding is consistent with Gropper et al (2015).…”

Section: Resultssupporting

confidence: 90%

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

Aziz¹,

Knutsen²

2019

JBFE

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This study empirically examines the impact of economic freedom quality and global financial crisis on the banking sector profitability in the Arab region. The analysis is performed by employing system GMM estimation in panel data comprising of 14 Arab countries over the period 1985-2016. The study constructed an economic freedom index based on the economic freedom indicators. The findings indicate that greater economic freedom has positively influenced the profitability of the Arab banking sector. The results also suggest that the more profitable banks are those that have lower operating expenses against asset and income, better capitalized, more diversified and concentrated at economies having growth in the GDP. Furthermore, the global financial crisis in 2008 negatively impacted the profits of Arab banks.

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Section: Resultssupporting

confidence: 90%

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

Aziz¹,

Knutsen²

2019

JBFE

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“…Gropper et al (2013) find that banks headquartered in a state whose US Senator or US Representative chairs the banking committees in Congress have higher return on assets relative banks headquartered in other states. Gropper et al (2015) confirm the findings reported by Gropper et al (2013). However, they find that political connections are more valuable in states where there is less economic freedom, which is consistent with the cross-country evidence from Heckelman and Powell (2010).…”

Section: Hypothesis Developmentsupporting

confidence: 88%

Local corruption and local stock returns

Karadas

McAndrew

Schlosky

2019

JFC

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Purpose The purpose of this study is to investigate the effect of corruption on stock returns in the USA. In particular, this study examines the relationship between corruption in a state (i.e. local corruption) and stock returns of firms headquartered in that state (i.e. local returns). Design/methodology/approach This paper uses the Fama–MacBeth two-step regressions. In the first step, the authors estimate the coefficients on the market, size, value and momentum factors for individual stocks. In the second step, they use those coefficients along with the corruption score of the state where stocks are headquartered to explain stock returns. Findings This paper finds that corruption in a state adversely affects stock returns of firms headquartered in that state. It further documents that the effect of corruption on stock returns is limited to geographically concentrated firms. Originality/value To the best of the authors’ knowledge, this paper is the first to document the effect of state-level corruption on individual stock returns in the USA using the Fama–MacBeth regressions. This study contributes to the literature by documenting the effect of local corruption on local stock returns in a low corruption country.

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“…Belasen and Hafer (2012) and Nikolaev and Bennett (2016) positively relate the levels of well‐being with economic freedom. Grooper et al (2015), Cebula et al (2013); Cebula et al (2016) and Gwartney et al (2004) argue that a high level of economic freedom causes a greater growth and development of their companies and positive relations with variables such as investment, growth, human development in terms of health and education, among others. Bjornskov (2016) affirms that economic freedom has a strong positive impact on the recovery times of an economic crisis.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The results show show a positive relationship between Economic Freedom and social welfare. Grooper, Jahera, and Chu (2015); Cebula, Duquette, and Mixon (2013); Cebula, Rossi, and Clark (2016); Gwartney, Holcombe, and Lawson (2004).…”

Section: Mohlmentioning

confidence: 99%

The relation between the index of economic freedom and good governance with efficiency of the European Structural Funds

Gómez‐Gallego

Moreno‐Enguix

Gómez‐Gallego

2022

Papers in Regional Science

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This research evaluates the management efficiency of the European Structural Funds according to whether their productive orientation is based on employment or on economic and social development. The data refers to 2000-2020 for the 28 EU countries. The paper includes an analysis of the influence of the country's governance and economic freedom on the production function associated with the funds received. The results show that there is a technological gap between groups of countries defined by their goodness of governance. On the other hand, there is a positive relationship of economic freedom and the efficiency scores of the countries.

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Political power, economic freedom and Congress: Effects on bank performance

Cited by 45 publications

References 49 publications

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

Local corruption and local stock returns

The relation between the index of economic freedom and good governance with efficiency of the European Structural Funds

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