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

Hans Degryse, Armin Schwienbacher and Thomas Lambert

No 9621, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Initially, voting rights were 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 uncertainty and financial returns from stock markets. Our panel data evidence covering 1830-1999 shows that tighter restrictions on the voting franchise induce a greater stock market development, whereas a broader voting franchise is more conducive towards the banking sector, consistent with Perotti and von Thadden (2006). Our results are robust to controlling for other political determinants and endogeneity.

Keywords: Banking sector; Financial development; Financial structure; Political economy; Stock markets; Voting franchise (search for similar items in EconPapers)
JEL-codes: D72 G10 O16 P16 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries (2018)
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)
Working Paper: The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries (2013)
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