Political influence and banking performance: Evidence from the African countries

Abstract

This paper aims to explore the impact of political factors on the performance of state-owned banks in 50 African countries over the 2005–2012 period. We use panel data methods (fixed effects and quantile regression models) with unique hand-collected data concerning political factors and ownership structures of African banks. Our main results confirm the social and political view of state-owned banks for the African countries, but the results are somewhat heterogeneous according to the level of banking performance: ownership structure significantly affects the performance of banks with low profitability compared to those with high profitability. However, we find no significant political interference in banking activity. Finally, our results confirm that politicians do not prioritize monetary policy or banking regulation in their electoral programs in African countries.