The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries

Hans Degryse, Thomas Lambert and Armin Schwienbacher

Economic Journal, 2018, vol. 128, issue 611, 1433-1475

Abstract: Voting rights were initially limited to wealthy elites providing political support for stock markets. The franchise expansion induces the median voter to provide political support for banking development, as this new electorate has lower financial holdings and benefits less from the riskiness and financial returns from stock markets. Our panel data evidence covering the years 1830–1999 shows that tighter restrictions on the voting franchise induce greater stock market development, whereas a broader voting franchise is more conducive to the banking sector, consistent with Perotti and von Thadden (2006). The results are robust to controlling for other institutional arrangements and endogeneity.

Date: 2018
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https://doi.org/10.1111/ecoj.12459

Related works:
Working Paper: The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries (2013)
Working Paper: The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries (2013)
Working Paper: The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries (2013)
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