Baum, Christopher, Mustafa Caglayan, Dorothea Schäfer, and Oleksandr Talavera. “Political patronage in Ukranian banking”. Boston College Working Papers in Economics 657, 2007.
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 margins. The gap between affiliated banks' and non-affiliated banks' capitalization ratios, is narrowing over time. Parliamentary deputies might use financial institutions to achieve political goals which reduces their banks' performance.