Winning Connections? Special Interests and the Sale of Failed Banks

Wolf Wagner (), Thomas Lambert and ,
Authors registered in the RePEc Author Service: Deniz Igan

No 12440, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study how lobbying affects the resolution of failed banks, using a sample of FDIC auctions between 2007 and 2014. We show that bidding banks that lobby regulators have a higher probability of winning an auction. In addition, the FDIC incurs higher costs in such auctions, amounting to 16.4 percent of the total resolution losses. We also find that lobbying winners have worse operating and stock market performance than their non-lobbying counterparts, suggesting that lobbying results in a less efficient allocation of failed banks. Our results provide new insights into the bank resolution process and the role of special interests.

Keywords: Bank resolution; Failed banks; Financial crisis; Lobbying; Rent seeking (search for similar items in EconPapers)
JEL-codes: D72 E65 G18 G21 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-ban, nep-eff and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Winning connections? Special interests and the sale of failed banks (2022)
Working Paper: Winning Connections? Special Interests and the Sale of Failed Banks (2017)
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