THE EFFECT OF CAMPAIGN CONTRIBUTIONS ON STATE BANKING REGULATION AND BANK EXPANSION IN U.S

Aggey Semenov and Hector Perez Saiz ()
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Aggey Semenov: University of Ottawa

No 1265, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: We use a unique detailed database with individual state campaign contributions made by banks in U.S. from 1998 to 2010 to understand how these contributions influence the regulation of the banking industry in that state, and in particular the approval of bank mergers by the state banking regulatory authority. We find that banks tend to contribute more to candidates that play a key role in appointing the head of the state banking regulator. In addition, we find that, after controlling for size or other key bank level variables, banks that are involved in a merger in the near future are more likely to contribute to elected senators and the governor, who play key roles in appointing the head of the state bank regulator that approves mergers which involve state banks. Our results help to understand better the role that campaign contributions have in the shaping of bank regulation in U.S. and the bank market structure in the last two decades.

Date: 2014
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mfd and nep-pol
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