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Open AccessArticle

Political Stability and Bank Flows: New Evidence

Department of Economics and Statistics, Università degli Studi di Torino, 10134 Torino, Italy
J. Risk Financial Manag. 2020, 13(3), 56; https://doi.org/10.3390/jrfm13030056
Received: 4 February 2020 / Revised: 10 March 2020 / Accepted: 12 March 2020 / Published: 16 March 2020
(This article belongs to the Collection Feature Papers in Applied Economics and Finance)
In this paper, we use a rich dataset of several countries to analyze how sound political measures affect cross-border bank flows. Furthermore, our work is the first to comprehensively examine various components of political stability on the aforementioned subject using a larger sample than previous studies, and covering the period 1984–2013. Our paper will inform policy makers which particular aspects of political stability have a significant effect on cross-border bank flows and provide an outline on the favorable long term political and institutional development to increase such flows. We find that sound political measures—and therefore, higher political stability—increase cross-border bank flows, especially in advanced economies. Moreover, we find that in advanced economies, the political stability components; socioeconomic conditions, investment profile, corruption within the political system, religious tensions, ethnic tensions, and bureaucracy quality have a positive and close association with such bank flows. In our work, we also find that policies aiming to increase political stability have a stronger impact after the financial crisis of 2008, namely with regard to policies that affect socioeconomic conditions, investment profile, corruption within the political system and religious tensions. View Full-Text
Keywords: cross-border bank flows; political stability; economic risk; financial risk cross-border bank flows; political stability; economic risk; financial risk
MDPI and ACS Style

Venâncio de Vasconcelos, M. Political Stability and Bank Flows: New Evidence. J. Risk Financial Manag. 2020, 13, 56.

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