Denis Davydov: Does state ownership of banks matter? Russian evidence from the financial crisis

BOFIT-seminaarit 2011–2016 tiistai 26.4.2016, 10.30
Tiistai
26.4.2016
klo 10.30–11.30

Denis Davydov  (University of Vaasa)
Does state ownership of banks matter? Russian evidence from the financial crisis

Abstract
This paper examines the effects of state ownership and government interventions on lending behavior and capitalization of banks over the period 2005-2011. Using data from the highly state-influenced Russian banking sector, it is documented that the relationship between state ownership and lending is nonlinear. While overall loan growth decreased and interest rates rose, it is found that fully state-controlled banks increased lending and charged lower interest rates during the crisis of 2008-2010. Moreover, fully state-owned and state-supported banks demonstrated counter-cyclical lending behavior during the crisis. However, while state-owned banks were better protected against asset default, there is a weak evidence to suggest that government interventions may result in increased riskiness of banks.

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