Banking system control, capital allocation, and economy performance

Journal of Financial Economics

Volumn 100, Issue 2, 2011, Pages 264-283

  Morck, Randall ^a   Deniz Yavuz, M ^b   Yeung, Bernard ^c  

^a UNIVERSITY OF ALBERTA   (Canada)

^b PURDUE UNIVERSITY   (United States)

^c NATIONAL UNIVERSITY OF SINGAPORE   (Singapore)

Author keywords

Banking; Capital allocation; Economic growth; Family business; Ownership structure

Indexed keywords

EID: 79952455837     PISSN: 0304405X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jfineco.2010.12.004     Document Type: Article

References (123)

1. Acemoglu D., Johnson S., Robinson J. Institutions as the fundamental cause of long-run economic growth. Handbook of Economic Growth 2005, 385-472. P. Aghion, S. Durlauf (Eds.).
2. Aghion P., Howitt P. Endogenous Growth Theory 1997, MIT Press.
3. Aghion P., Howitt P., Mayer-Foulkes D. The effect of financial development on convergence: theory and evidence. Quarterly Journal of Economics 2005, 120:173-222.
4. Allen F., Gale D. Understanding Financial Crises 2007, Oxford University Press, New York.
5. Almeida H., Wolfenzon D. A theory of pyramidal ownership and family business groups. Journal of Finance 2006, 61(6):2637-2680.
6. Almeida H., Wolfenzon D. Should business groups be dismantled? The equilibrium costs of efficient internal capital markets. Journal of Financial Economics 2006, 79:99-144.
7. Aronoff C., Ward J. More Than Family: Non-Family Executives in the Family Business 2000, Family Enterprise Publishers, Marietta, GA.
8. Bankscope. Bureau Van Dijk Electronic Publishing, http://www.bankscope.com.
9. Barro R. Determinants of Economic Growth: A Cross-Country Empirical Study 1997, MIT Press, Cambridge, Mass.
10. Barro R. Economic growth in a cross section of countries. The Quarterly Journal of Economics 1991, 106:407-443.
11. Barro R. Human capital and growth. The American Economic Review 2001, 91:12-17.
12. Barro R., Lee J. International measures of schooling years and schooling quality. American Economic Review 1996, 86:218-223.
13. Bebchuk L., Kraakman R., Triantis G. Stock pyramids, cross-ownership, and dual class equity: the mechanisms and agency costs of separating control from cash-flow rights. Concentrated Corporate Ownership 2000, 295-315. University of Chicago Press, Chicago and London. R. Morck (Ed.).
14. Beck T. Financial dependence and international trade. Review of International Economics 2003, 11:296-316.
15. Beck T., Levine R. Industry growth and capital allocation: does having a market- or bank-based system matter?. Journal of Financial Economics 2002, 64:147-180.
16. Beck T., Levine R. Stock markets, banks, and growth: panel evidence. Journal of Banking & Finance 2004, 28:423-442.
17. Beck T., Levine R., Loayza N. Finance and the sources of growth. Journal of Financial Economics 2000, 58:261-300.
18. Beck T., Demirgüç-Kunt A., Maksimovic V. Financing patterns around the world: are small firms different?. Journal of Financial Economics 2008, 89:467-487.
19. Bennedsen M., Nielsen K., Pérez-González F., Wolfenzon D. Inside the family firm: the role of families in succession decisions and performance. Quarterly Journal of Economics 2007, 122:647-691.
20. Burkart M., Panunzi F., Shleifer A. Family firms. Journal of Finance 2003, 58:2167-2201.
21. Caprio G., Laeven L., Levine R. Governance and bank valuation. Journal of Financial Intermediation 2007, 16:584-617.
22. Daniels R., Trebilcock M. Rule of Law Reform and Development: Charting the Fragile Path of Progress 2008, Edward Elgar Publishing, Northampton.
23. Dell'Ariccia G., Detragiache E., Rajan R. The real effect of banking crises. Journal of Financial Intermediation 2008, 17:89-112.
24. Demirguc-Kunt A., Detragiache E., Gupta P. Inside the crisis: an empirical analysis of banking systems in distress. Journal of International Money and Finance 2006, 25:702-718.
25. Demirguc-Kunt A., Levine R. Stock markets, corporate finance, and economic growth: an overview. World Bank Economic Review 1996, 10:223-239.
26. Demirguc-Kunt A., Maksimovic V. Law, finance and firm growth. Journal of Finance 1998, 53:2107-2137.
27. Dinc S. Politicians and banks: political influences on government-owned banks in emerging markets. Journal of Financial Economics 2005, 77:453-479.
28. Djankov S., Hart O., McLiesh C., Shleifer A. Debt enforcement around the World. Journal of Political Economy 2008, 116:1105.
29. Djankov S., Jindra J., Klapper L. Corporate valuation and the resolution of bank insolvency in East Asia. Journal of Banking & Finance 2005, 29:2095-2118.
30. Djankov S., La Porta R., Lopez-de-Silanes F., Shleifer A. The regulation of entry. Quarterly Journal of Economics 2002, 117:1-37.
31. Djankov S., La Porta R., Lopez-de-Silanes F., Shleifer A. The law and economics of self-dealing. Journal of Financial Economics 2006, 88:430-465.
32. Dornbusch R., Edwards S. The Macroeconomics of Populism in Latin America 1992, University of Chicago Press, Chicago.
33. Durnev A., Li K., Morck R., Yeung B. Capital markets and capital allocation: implications for economies in transition. Economics of Transition 2004, 12:593-634.
34. Dyck A., Zingales L. Private benefits of control: an international comparison. Journal of Finance 2004, 59:537-600.
35. Faccio M. Politically connected firms. American Economic Review 2006, 96:369-386.
36. Faccio M., Masulis R., McConnell J. Political connections and corporate bailouts. Journal of Finance 2006, 61:2597-2635.
37. Fisman R., Khanna T. Facilitating development: the role of business groups. World Development 2004, 32:609-628.
38. Fisman R., Miguel E. Economic Gangsters: Corruption, Violence, and the Poverty of Nations 2008, Princeton University Press, Princeton.
39. Fogel K. Oligarchic family control, social economic outcomes, and the quality of government. Journal of International Business Studies 2006, 37:603-622.
40. Fogel K., Morck R., Yeung B. Big business stability and economic growth: is what's good for General Motors good for America?. Journal of Financial Economics 2008, 89:83-108.
41. Gentry W., Hubbard G. Tax policy and entrepreneurial entry. The American Economic Review 2000, 90:283-287.
42. Gini C. Measurement of inequality and incomes. Economic Journal 1921, 31:124-126.
43. Glaeser E., Scheinkman J., Shleifer A. The injustice of inequality. Journal of Monetary Economics 2003, 50:199-222.
44. Gordon R., Dew-Becker I. Selected issues in the rise of income inequality. Brookings Papers on Economic Activity, Economic Studies Program 2007, 38:169-192.
45. Greenwood J., Jovanovic B. Financial development, growth, and the distribution of income. Journal of Political Economy 1990, 98:1076-1178.
46. Haber S. Crony Capitalism and Economic Growth in Latin America: Theory and Evidence 2002, Hoover Institution Press, Stanford.
47. Haber S., Maurer N., Razo A. The Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico 2003, Cambridge University Press, Cambridge, pp. 1876-1929.
48. Hellman J., Jones G., Kaufmann D. Seize the state, seize the day: state capture and influence in transition economies. Journal of Comparative Economics 2003, 31:751-773.
49. Högfeldt P. The history and politics of corporate ownership in Sweden. A History of Corporate Governance Around the World: Family Business Groups to Professional Managers 2005, 517-580. University of Chicago Press, Chicago. R. Morck (Ed.).
50. International Monetary Fund, April 2009. Global Financial Stability Report.
51. Jayaratne J., Strahan P. The finance-growth nexus: evidence from bank branch deregulation. Quarterly Journal of Economics 1996, 111:639-670.
52. Jaffe A. Technological opportunity and spillovers of R&D: evidence from firms' patents, profits, and market value. The American Economic Review 1986, 76:984-1001.
53. Jensen M., Meckling W. Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics 1976, 3:305-360.
54. John K., Litov L., Yeung B. Corporate governance and managerial risk taking: theory and evidence. Journal of Finance 2008, 63:1679-1728.
55. Johnson S., La Porta R., Lopez-De-Silanes F., Shleifer A. Tunneling. The American Economic Review 2000, 90:22-27.
56. Kane E. The Gathering Crises in Federal Deposit Insurance 1985, MIT Press, Cambridge, MA.
57. Khanna T. Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours 2008, HBS Press, Massachusetts.
58. Khanna T., Palepu K. Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups. Journal of Finance 2000, 55:867-891.
59. Khanna T., Palepu K., Garten J. Why focused strategies may be wrong for emerging markets. World View: Global Strategies for the New Economy 2000, Harvard Business School Press, Boston, pp. 21-36.
60. Khanna T., Rivkin J. Estimating the performance effects of business groups in emerging markets. Strategic Management Journal 2001, 22:45-74.
61. Khanna T., Yafeh Y. Business groups and risk sharing around the world. Journal of Business 2005, 78:301-340.
62. Khanna T., Yafeh Y. Business groups in emerging markets: paragons or parasites?. Journal of Economic Literature 2007, 45:331-372.
63. Kindleberger C., Aliber R. Manias, panics, and crashes: a history of financial crises 2005, John Wiley & Sons, Hoboken.
64. King R., Levine R. Finance and growth: schumpeter might be right. Quarterly Journal of Economics 1993, 108:717-737.
65. King R., Levine R. Finance, entrepreneurship, and growth: theory and evidence. Journal of Monetary Economics 1993, 32:513-542.
66. Krueger A. The political economy of the rent-seeking society. The American Economic Review 1974, 64:291-303.
67. Krueger A. Why trade liberalisation is good for growth. The Economic Journal 1998, 108:1513-1522.
68. Krueger A. Why crony capitalism is bad for economic growth. Crony Capitalism and Economic Growth in Latin America: Theory and Evidence 2002, 1-23. Hoover Institution Press, Stanford. S. Haber (Ed.).
69. Krueger A. Willful ignorance: the struggle to convince the free trade skeptics. World Trade Review 2004, 3:483-493.
70. La Porta R., Lopez-de-Silanes F., Shleifer A. Corporate ownership around the world. Journal of Finance 1999, 54:471-517.
71. La Porta R., Lopez-de-Silanes F., Shleifer A. Government ownership of banks. Journal of Finance 2002, 57:265-301.
72. La Porta R., Lopez-de-Silanes F., Shleifer A., Vishny R. Legal determinants of external finance. Journal of Finance 1997, 52:1131-1150.
73. La Porta R., López-de-Silanes F., Zamarripa G. Related lending. Quarterly Journal of Economics 2003, 118:231-268.
74. Laeven L., Levine R. Bank governance, regulation and risk taking. Journal of Financial Economics 2009, 93:259-275.
75. Lester R., Cannella A. Interorganizational families: how family firms use interlocking directorates to build community-level social capital. Entrepreneurship Theory and Practice 2006, 30:755-775.
76. Levine R. Stock markets, growth, and tax policy. Journal of Finance 1991, 46(4):1445-1465.
77. Levine R. Financial intermediary services and growth. Journal of the Japanese and International Economies 1992, 6:383-405.
78. Levine R. Stock markets: a spur to economic growth. Finance and Development 1996, 33:7-10.
79. Levine R. Financial development and economic growth: views and agenda. Journal of Economic Literature 1997, 35:688-726.
80. Levine R. Bank-based or market-based financial systems: which is better?. Journal of Financial Intermediation 2002, 11:398-428.
81. Levine R., Loayza N., Beck T. Financial intermediation and growth: causality and causes. Journal of Monetary Economics 2000, 46:31-77.
82. Levine R., Zervos S. Stock markets, banks, and economic growth. The American Economic Review 1998, 88:537-558.
83. Lewis A. Principles of Economic Planning 1969, Allen and Unwin, London.
84. Mankiw G., Romer D., Weil D. A contribution to the empirics of economic growth. Quarterly Journal of Economics 1992, 107:407-437.
85. Megginson W. The economics of bank privatization. Journal of Banking & Finance 2005, 29:1931-1980.
86. Morck R., Nakamura M. Business groups and the big push: Meiji Japan's mass privatization and subsequent growth. Enterprise and Society 2007, 8:543-601.
87. Morck R., Percy M., Tian G., Yeung B. The rise and fall of the widely held firm: a history of corporate ownership in Canada. A History of Corporate Governance Around the World: Family Business Groups to Professional Managers 2005, 65-140. University of Chicago Press, Chicago and London. R. Morck (Ed.).
88. Morck R., Shleifer A., Vishny R. Management ownership and market valuation: an empirical analysis. Journal of Financial Economics 1988, 20:293-315.
89. Morck R., Stangeland D., Yeung B. Inherited wealth, corporate control, and economic growth: the Canadian disease?. Concentrated Corporate Ownership 2000, 319-369. R. Morck (Ed.).
90. Morck R., Wolfenzon D., Yeung B. Corporate governance, economic entrenchment, and growth. Journal of Economic Literature 2005, 43:655-720.
91. Morck R., Yeung B. Family control and the rent-seeking society. Entrepreneurship Theory and Practice 2004, 28:391-409.
92. Murphy K., Shleifer A., Vishny R. Industrialization and the big push. Journal of Political Economy 1989, 97:1003-1026.
93. Murphy K., Shleifer A., Vishny R. The allocation of talent: implications for growth. Quarterly Journal of Economics 1991, 106:503-530.
94. Murphy K., Shleifer A., Vishny R. Why is rent-seeking so costly to growth?. The American Economic Review 1993, 83:409-414.
95. Nadiri I., Mamuneas T. The effect of public infrastructure and R & D capital on the cost structure and performance of U.S. manufacturing industries. Review of Economics and Statistics 1994, 76:22-37.
96. Nenova T. The value of corporate voting rights and control: a cross-country analysis. Journal of Financial Economics 2003, 68:325-351.
97. North D. Institutions and economic growth: an historical introduction. World Development 1989, 17:1319-1332.
98. Olson M. The Logic of Collective Action: Public Goods and the Theory of Groups 1965, Harvard University Press, Cambridge.
99. Perez-Gonzalez F. Inherited control and firm performance. The American Economic Review 2006, 96:1559-1588.
100. Perotti, E., Volpin, P., 2007. Investor protection and entry. Working Paper, Tinbergen Institute, Unpublished.
101. Perotti, E., Vorage, M., 2008. Political allocation of finance. Working paper, University of Amsterdam, Unpublished.
102. Rajan R. Why bank credit policies fluctuate: a theory and some evidence. Quarterly Journal of Economics 1994, 109:399-442.
103. Rajan R., Zingales L. Financial dependence and growth. The American Economic Review 1998, 88:559-586.
104. Rajan R., Zingales L. Financial systems, industrial structure, and growth. Oxford Review of Economic Policy 2001, 17:467-482.
105. Rajan R., Zingales L. The great reversals: the politics of financial development in the twentieth century. Journal of Financial Economics 2003, 69:5-50.
106. Rajan R., Zingales L. Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity 2004, Crown Business, New York.
107. Rosenstein-Rodan P. Problems of industrialization of Eastern and South-Eastern Europe. Economic Journal 1943, 53:202-211.
108. Saunders A., Strock E., Travlos N. Ownership structure, deregulation, and bank risk taking. Journal of Finance 1990, 45:643-654.
109. Schouten M.C., Siems M.M. The evolution of ownership disclosure rules across countries. Journal of Corporate Law Studies 2010, 10:451-483.
110. Schumpeter J. Theorie der Wirtschaftlichen Entwicklung 1912, Duncker and Humblot, Leipzig.
111. Schumpeter J. Capitalism, Socialism, and Democracy 1942, Harper & Brothers, New York and London.
112. Sen A. Inequality Reexamined 1992, Oxford University Press, New York.
113. Shleifer A., Vishny R. Large shareholders and corporate control. Journal of Political Economy 1986, 94:461-488.
114. Shleifer A., Vishny R. Corruption. The Quarterly Journal of Economics 1993, 108:599-617.
115. Shleifer A., Vishny R. The Grabbing Hand: Government Pathologies and Their Cures. Cambridge, MA 1998, Harvard University Press.
116. Smith B., Amoako-Adu B. Management succession and financial performance of family controlled firms. Governance and Ownership 2005, 314-341. Elgar, Cheltenham, UK. R. Watson (Ed.).
117. Solow R. A contribution to the theory of economic growth. The Quarterly Journal of Economics 1956, 70:65-94.
118. Stulz R. Managerial control of voting rights: financing policies and the market for corporate control. Journal of Financial Economics 1988, 20:25-54.
119. Stulz R. The limits of financial globalization. Journal of Finance 2005, 60:1595-1638.
120. Taboada, A., 2008. Impact of changes in government ownership of banks on the allocation of capital: international evidence. Working Paper, University of Tennessee, Unpublished.
121. Tobin J. On the efficiency of the financial system. The Market on Trial 1989, 125-138. Columbia University Press, New York. C. Johnson (Ed.).
122. Villalonga B., Amit R. How do family ownership, control, and management affect firm value. Journal of Financial Economics 2006, 80:385-417.
123. Wurgler J. Financial markets and the allocation of capital. Journal of Financial Economics 2000, 58:187-214.