Political patronage in Ukrainian banking

Christopher F. Baum, Oleksandr Talavera, Mustafa Caglayan, Dorothea Schaefer

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20 Citations (Scopus)


This paper empirically investigates the link between political patronage and bank performance for Ukraine during 2003Q3–2005Q2. We find significant differences between politically affiliated and non-affiliated banks. The data suggest that affiliated banks have significantly lower interest rate margins and increase their capitalization. Furthermore, we show that the level of activity of affiliated deputies in parliament has a positive (negative) impact on banks’ capitalization ratio (interest rate margin). Our findings imply, in line with the related literature, that political affiliation has important effects on banks’ behaviour.
Original languageEnglish
Pages (from-to)537-557
Number of pages21
JournalEconomics of Transition
Issue number3
Publication statusPublished - Jul 2008

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