Title: State ownership and bank lending: evidence from Turkish banking

Authors: Dimitris K. Chronopoulos; John O.S. Wilson; Muhammed H. Yilmaz

Addresses: Centre for Responsible Banking and Finance, Department of Finance, Business School, University of St. Andrews, The Gateway, North Haugh, St. Andrews, Fife, KY16 9RJ, UK ' Centre for Responsible Banking and Finance, Department of Finance, Business School, University of St. Andrews, The Gateway, North Haugh, St. Andrews, Fife, KY16 9RJ, UK ' Centre for Responsible Banking and Finance, Department of Finance, Business School, University of St. Andrews, The Gateway, North Haugh, St. Andrews, Fife, KY16 9RJ, UK; Central Bank of the Republic of Türkiye, Ümraniye, İstanbul, 34768, Türkiye

Abstract: We investigate state bank lending behaviour during crisis periods by exploiting the global financial crisis as an exogenous shock, and a high-frequency spatial banking dataset. Using Turkey for the period 2007Q4-2011Q4 as a setting, our results suggest that state banks maintain lending relative to domestic private and foreign banks. Moreover, state banks appear to play a mitigating role in alleviating market failures rather than engaging in politically motivated lending. Overall, our results highlight the importance of state bank lending during periods of financial turmoil.

Keywords: state banks; market failures; difference-in-differences; DiD; political motives.

DOI: 10.1504/IJBAAF.2025.146545

International Journal of Banking, Accounting and Finance, 2025 Vol.15 No.1/2, pp.5 - 43

Received: 21 Mar 2024
Accepted: 08 Oct 2024
Published online: 02 Jun 2025 *

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