Banking and Crony Capitalism in Egypt

Since the mid-2000s, financial liberalization in Egypt accelerated, and dynamic and seemingly competitive private banks emerged and grew, with several foreign banks entering the market, in some cases in associations with local banks. The cronyism of the 1980s and 90s on the other hand was much more centrally connected with directed state credit, as banking was then dominated by the state. This project looks at the relation between banking and cronyism in liberalized economies, with a focus on the case of Egypt. The main question asked is: In a liberalized banking system, by which mechanism is private credit channeled disproportionally to politically connected firms (CFs), as we know has happened in Egypt and Tunisia between 2003-2011?