Electoral cycles in savings bank lending

Florian Englmaier and Till Stowasser

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We provide evidence that German savings banks – where local politicians are by law involved in their management – systematically adjust lending policies in response to local electoral cycles. The different timing of county elections across states and the existence of a control group of cooperative banks – that are very similar to savings banks but lack their political connectedness – allow for clean identification of causal effects of county elections on savings banks’ lending. These effects are economically meaningful and robust to various specifications. Moreover, politically induced lending increases in incumbent party entrenchment and in the contestedness of upcoming elections.

Keywords: Bank lending cycles; political business cycles; political connectedness; public banks; government ownership of firms (search for similar items in EconPapers)
JEL-codes: D72 D73 G21 (search for similar items in EconPapers)
Date: 2013-11-29
New Economics Papers: this item is included in nep-ban, nep-cdm and nep-pol
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Citations: View citations in EconPapers (53)

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Related works:
Journal Article: Electoral Cycles in Savings Bank Lending (2017)
Working Paper: Electoral cycles in savings bank lending (2014)
Working Paper: Electoral Cycles in Savings Bank Lending (2013)
Working Paper: Electoral cycles in savings bank lending (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:508

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