Political Influence and TARP Investments in Credit Unions

Elisabeta Pana () and Linus Wilson ()
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Elisabeta Pana: Department of Business Administration, Illinois Wesleyan University, CLA 324 Bloomington, IL 61701, USA
Linus Wilson: Department of Economics & Finance, B.I. Moody III College of Business, University of Louisiana, 214 Hebrard Boulevard, Moody Hall 253, P.O. Box 44570, Lafayette, LA 70504-4570, USA

Quarterly Journal of Finance (QJF), 2012, vol. 02, issue 04, 1-26

Abstract: About 48 credit unions received capital injections as part of the financial sector bailout. The predicted probability of receiving bailout funds jumps from 29% to 81% for the typical credit union, if the institution's headquarters was in the district of a member of the U. S. House Financial Services Committee (HFS). The credit unions receiving funds were significantly less likely to lend, contrary to the goals of the program. These results indicate that political influence may be an important determinant of which institutions receive taxpayer funds.

Keywords: Bailout; cooperatives; credit unions; CDCI; CDFI; community development capital initiative; community development financial institution; EESA; emergency economic stabilization act; politics; subordinated debt; SBLF; small business lending fund; U. S. House Financial Services Committee; TARP (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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DOI: 10.1142/S2010139212500176

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