Bank efficiency in Middle East and North African countries : does political connection type matter?

This study examines the efects of the political connections of chief executive ofc‑ ers (CEOs) or directors on technical, allocative, and cost bank efciencies examining a panel of 144 banks operating in 12 Middle Eastern and North African (MENA) countries observed over the 2008-2021 period. Using random efect tobit regressions, we fnd that the three types of political connections explored (aggregate, CEO, and board of directors) have negative efects on banks' technical and cost efciencies. In addition, CEO political connections exhibit superior explanatory power. These fndings remain robust when we consider the sample in terms of monarchist and republican countries. Further evidence reveals that the efect of political connections is observed more strongly during the pandemic period (2020-2021) than during the 2008-2009 fnancial crisis period. Our results indicate that banks in MENA countries must strategically regu‑ late bank political connections during crises and consistently thereafter. Our fndings have implications for regulators investors and authorities in MENA countries.