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.
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