The impact of government assistance on banks’ efficiency

Md Jahir Uddin Palas; Fernando Moreira

doi:10.1002/ijfe.2239

The impact of government assistance on banks’ efficiency

Research output: Contribution to journal › Article › peer-review

Abstract

This study investigates the impact of the Capital Purchase Programme (CPP) on recipient banks’ efficiency. Using data from 2000 to 2017, we first conduct Difference-in-Differences (DiD) analyses as typically done in the related literature. However, given the limitations of the DiD approach in this context, we proceed with Instrumental Variable analyses by adopting three innovative instruments based on the influence of donations to political campaigns on receiving government support. We find that CPP assistance have a significant negative causal relationship with recipient banks’ efficiency. Our results are robust to alternative sample specifications and estimation methods.

Original language	English
Pages (from-to)	1-18
Journal	International Journal of Finance and Economics
Volume	N/A
Early online date	27 Aug 2020
DOIs	https://doi.org/10.1002/ijfe.2239
Publication status	E-pub ahead of print - 27 Aug 2020

Keywords / Materials (for Non-textual outputs)

government assistance
bank efficiency
electoral donations

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10.1002/ijfe.2239

PalasMoreiraIJFE2020TheImpactOfGovernmentAssistance
This is the peer reviewed version of the following article: Palas, MJU, Moreira, F. The impact of government assistance on banks' efficiency. Int J Fin Econ. 2020; 1– 18. https://doi.org/10.1002/ijfe.2239, which has been published in final form at https://onlinelibrary.wiley.com/doi/full/10.1002/ijfe.2239. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Accepted author manuscript, 403 KB

Fernando Moreira
- Business School - Senior Lecturer in Banking and Risk Management
- Management Science and Business Economics
- Centre for Service Excellence
- Edinburgh Strategic Resilience Initiative
- Credit Research Centre
- Management Science
- Edinburgh Centre for Financial Innovations
Person: Academic: Research Active

Cite this

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abstract = "This study investigates the impact of the Capital Purchase Programme (CPP) on recipient banks{\textquoteright} efficiency. Using data from 2000 to 2017, we first conduct Difference-in-Differences (DiD) analyses as typically done in the related literature. However, given the limitations of the DiD approach in this context, we proceed with Instrumental Variable analyses by adopting three innovative instruments based on the influence of donations to political campaigns on receiving government support. We find that CPP assistance have a significant negative causal relationship with recipient banks{\textquoteright} efficiency. Our results are robust to alternative sample specifications and estimation methods.",

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The impact of government assistance on banks’ efficiency

Abstract

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Fernando Moreira

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