Elections for sale? Evidence from cash transactions around elections in Italy

Giuseppe De Feo, Giacomo De Luca, Mario Gara and Marianna Siino

No 202403, Working Papers from University of Liverpool, Department of Economics

Abstract: This paper studies the dynamics of electoral corruption in the context of local elections in Italy. It exploits the asynchronous nature in the timing of mayoral elections to estimate a relationship between elections and the municipality-level amount exchanged through cash transactions. Cash transactions are sourced from a unique comprehensive dataset, taken from the Aggregate Anti–Money Laundering (AML) Reports between 2008 and 2018, which all Italian financial intermediaries are mandated to file with reference to transactions worth \euro 15,000 or more. The difference-in-difference estimates, including municipality and time fixed effects, suggest that the municipal elections in Italy systematically trigger an anomalous increase in the volume of cash transactions, which we interpret as evidence of electoral corruption, i.e. an intense circulation of money to secure electoral support in the shadow of the law. Exploring the heterogeneity of our main result along several potential mediating factors confirms some intuitively appealing patterns, such as tighter competition, the presence of active criminal organizations, as well as the size of the municipality budget, let us show which significantly affects the volume of cash transactions. Our results can be used to define better anticorruption policies on political campaign practices specifically focusing on cash payments. The same approach can be easily applied to other countries and contexts, by drawing on the data submitted to AML authorities by financial intermediaries.

Keywords: D72; D73; F33; G28; K42 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2024-03
New Economics Papers: this item is included in nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:202403

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