Elections, Political Competition and Bank Failure
Wai-Man Liu and
MPRA Paper from University Library of Munich, Germany
We model and predict that politicians have incentives to delay bank failure in election years and that this incentive is exacerbated if the election is close. Our empirical application using the US data supports these predictions. At the bank level, we show that bank failure in an election year is four times less likely to occur if the election was among the most competitive (top quartile). At the state level, bank failure is about 1.8 times less likely to occur in an election year. A three point swing in the competitiveness of the election increases this election year bias to 2.2.
Keywords: bank failure; elections; political competition (search for similar items in EconPapers)
JEL-codes: D73 D72 G28 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pol
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https://mpra.ub.uni-muenchen.de/48689/1/MPRA_paper_48689.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/51028/1/MPRA_paper_51028.pdf revised version (application/pdf)
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