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Crony Capitalism (crony + capitalism)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

Domestic Crony Capitalism and International Fickle Capital: Is There a Connection?

INTERNATIONAL FINANCE, Issue 1 2001
Shang-Jin WeiArticle first published online: 16 DEC 200
Domestic crony capitalism and fickle international capital flows are often suggested as two rival explanations for currency crises. This article examines a possible linkage between the two that has not been explored much in the literature: domestic crony capitalism may make a country more dependent on the more fickle type of international capital flows (e.g. international bank loans) rather than the less volatile type (e.g. foreign direct investment). It presents statistical evidence that the degree of domestic crony capitalism is indeed associated with a higher external loan-to-FDI ratio. Such a composition of capital flows has been identified as being associated with a higher incidence of a currency crisis. Therefore, even though crony capitalism does not forecast the exact timing of a crisis, it can nevertheless increase its likelihood. [source]

Excess Risk Premia of Asian Banks

INTERNATIONAL REVIEW OF FINANCE, Issue 2 2000
Jianping (J.P.) Mei
This paper develops a framework for gauging the risks of emerging market banks by using stock market data. Employing a multifactor asset pricing model that allows for time-varying risk premia, we find the presence of large excess risk premia on Asian bank stocks, especially in those markets affected by the Asian financial crisis. We find that the excess risk premia appear to be negatively related to the degree of economic freedom of a country but positively related to its corruption level. Thus, our findings are consistent with the view that crony capitalism in Asia may have distorted the market mechanism or the systematic risk exposure of banks. This suggests that the excess risk premium provides useful information on risk exposure for opaque banking systems where quality accounting information is not available. [source]