M. Deniz Yavuz
Krannert Graduate School of Management
403 W. State Street
West Lafayette, IN 47907-2056
Tel: 314 935 6339
NBER Working Papers and Publications
|April 2013||State-run Banks, Money Growth, and the Real Economy|
with Randall Morck, Bernard Yeung: w19004
Within countries, state-run banks’ lending correlates with prior money growth; otherwise similar private-sector banks’ lending does not. Aggregate credit and investment growth correlate with prior money growth more where banking systems are more state-run. Size and liquidity differences between state-run and private-sector banks do not drive these results; further tests discount broad classes of alternative explanations. Tests exploiting heterogeneity in likely political pressure on state-run banks associated with privatizations and elections suggest a command-and-control pseudo-monetary policy channel: changes in money growth, perhaps reflecting political pressure on the central bank, change banks’ lending constraints; political pressure actually changes state-run banks’ lending.
|December 2009||Banking System Control, Capital Allocation, and Economy Performance|
with Randall Morck, Bernard Yeung: w15575
We observe less efficient capital allocation in countries whose banking systems are more thoroughly controlled by tycoons or families. The magnitude of this effect is similar to that of state control over banking. Unlike state control, tycoon or family control also correlates with slower economic and productivity growth, greater financial instability, and worse income inequality. These findings are consistent with theories that elite-capture of a country's financial system can embed "crony capitalism".
Published: Morck, Randall & Deniz Yavuz, M. & Yeung, Bernard, 2011. "Banking system control, capital allocation, and economy performance," Journal of Financial Economics, Elsevier, vol. 100(2), pages 264-283, May. citation courtesy of