I’ve Got the Power: Mapping Connections between Lebanon’s Banking Sector and the Ruling Class - Economic Research Forum (ERF)

I’ve Got the Power: Mapping Connections between Lebanon’s Banking Sector and the Ruling Class

Jad Chaaban


Date:
October, 2016

NO.
1059

Length:
22 pages

Topic:
F5. International Relations, National Security, and International Political Economy
G2. Financial Institutions and Services
P1. Capitalist Systems

This paper explores the extent to which local commercial banks in Lebanon are linked to the country’s political class, and how this impacts their efficiency and sovereign risk exposure. By compiling detailed ownership and political affiliation data on the major 20 commercial banks in 2014, the paper shows that as much as 18 out of the 20 banks have major shareholders linked to political elites, and 43% of assets in the sector could be attributed to political control. “Crony capital” within the banking sector is also shown to impact the quality of banks’ loans, and their exposure to public debt.

ملخص

تستكشف هذه الورقة مدى ارتباط المصارف التجارية المحلية في لبنان بالطبقة السياسية في البلاد، وكيف يؤثر هذا على كفاءتها والتعرض للمخاطر السيادية. من خلال تجميع بيانات الملكية والانتماء السياسي مفصلة عن 20 البنوك التجارية الرئيسية في عام 2014، وتبين الورقة أنه بقدر 18 من أصل 20 بنكا فان المساهمين الرئيسيين مرتبطة بالنخب السياسية، ويمكن أن تعزى 43٪ من الأصول في هذا القطاع للسيطرة السياسية. يظهر ان “عاصمة المحسوبية” في القطاع المصرفي أيضا تؤثر على نوعية القروض للبنوك، وتعرضهم للدين العام

Research Fellows

Jad Chaaban

Associate Professor of Economics, American University of Beirut


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