The impact of government assistance on banks’ efficiency

Md Jahir Uddin Palas, Fernando Moreira

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

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 languageEnglish
Pages (from-to)1-18
JournalInternational Journal of Finance and Economics
Early online date27 Aug 2020
Publication statusE-pub ahead of print - 27 Aug 2020

Keywords / Materials (for Non-textual outputs)

  • government assistance
  • bank efficiency
  • electoral donations


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