The politician and his banker — How to efficiently grant state aid

Hainz, Christa; Hakenes, Hendrik

doi:10.1016/j.jpubeco.2011.09.005

Cited by 24 publications

(11 citation statements)

References 25 publications

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“…Public banks can ensure liquidity, payments and credit services in remote and otherwise unbanked areas (Hakenes and Schnabel, 2010). They may also finance infrastructure or higher education that would not be financed privately (Hainz and Hakenes 2012).…”

Section: B) Public Banks May Incorporate Social Externalitiesmentioning

confidence: 99%

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

2020

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Some rights reserved 1 2 3 4 23 22 21 20 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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Section: B) Public Banks May Incorporate Social Externalitiesmentioning

confidence: 99%

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

2020

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“…Public policy initiatives, such as deposit insurance have been found to be an efficient use of State resources (Diamond and Dybvig, ; and Grove et al, ). Moreover, it has been argued that banks are efficient recipients of State Aid to assist in onward welfare (Hainz and Hakenes, ). This is an important consideration as these resources could have been used elsewhere if they had not invested in the banks (Bank of England, ).…”

Section: Research Contextmentioning

confidence: 99%

“…The increasing delineation of aspects of property rights, such as stability, will help to encourage greater efficiency of the implicit support of the Government during all stages of the economic cycle (Barzel, ). Moreover, the banks become an efficient recipient of State Aid as responsibility for financial stability is diffused (Hainz and Hakenes, ).…”

Section: Quasi‐nationalisation As a Rescue Mechanism: A Property Righmentioning

confidence: 99%

Quasi‐Nationalisation in the UK Banking Crisis: A Problematic Policy Option

Henderson

2015

Financ Acc Manag

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The systemic banking crisis in 2008 led to the quasi‐nationalisation of two UK listed banks: The Royal Bank of Scotland and Lloyds Banking Group (National Audit Office, 2010). Using property rights and agency theory as the theoretical frameworks, this paper analyses whether the quasi‐nationalisation of these banks has been successful. It is argued that as a rescue mechanism, quasi‐nationalisation was a positive development. However, questions arise over its effect as an instrument of banking reform. The State's arm's length approach to management represents a lost opportunity to change the culture of profitability over people that contributed to the banking crisis.

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“…Vishny, 1994). As argued by Hainz and Hakenes (2012), a selfish politician often uses subsidized banks inefficiently from a welfare perspective. However, we focus on bank risk and not on overall bank performance (La Porta et al, 2002;Qian et al, 2011) or general bank lending behavior (Sapienza, 2004;Becker, 2007).…”

Section: Introductionmentioning

confidence: 99%

Politicians’ promotion incentives and bank risk exposure in China

Wang

Menkhoff

Schröder

et al. 2019

Journal of Banking & Finance

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This paper shows that politicians' pressure to climb the career ladder increases bank risk exposure in their region. Chinese local politicians are set growth targets in their region that are relative to each other. Growth is stimulated by debt-financed programs which are mainly financed via bank loans. The stronger the performance incentive the riskier the respective local bank exposure becomes. This effect holds primarily for local banks which are under a certain degree of control of local politicians and it has increased with the release of recent stimulus packages requiring local co-financing.

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The politician and his banker — How to efficiently grant state aid

Cited by 24 publications

References 25 publications

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

Quasi‐Nationalisation in the UK Banking Crisis: A Problematic Policy Option

Politicians’ promotion incentives and bank risk exposure in China

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