The Role of State-Owned Banks in Crises: Evidence from German Banks during COVID-19
35 Pages Posted: 29 Jan 2022 Last revised: 30 Sep 2022
Date Written: January 2, 2022
Abstract
By adopting a difference-in-differences specification combined with propensity score matching, I provide evidence using the microdata of German banks that state-owned savings banks have lent less than credit cooperatives during the COVID-19 crisis. In particular, the weaker lending effects of state-owned banks are pronounced for long-term and nonrevolving loans but insignificant for short-term and revolving loans. Moreover, the negative impact of government ownership is larger for borrowers who are more exposed to the COVID-19 shock and in regions where the ruling parties are longer in office and more positioned on the right side of the political spectrum.
Keywords: state-owned banks, bank credit, COVID-19
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