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Buying the Vote? The Economics of Electoral Politics and Small-Business Loans

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  • Duchin, Ran
  • Hackney, John

Abstract

We study the relation between electoral politics and government small-business lending, employment, and business formation. We construct novel measures of electoral importance capturing swing and base voters using data from Facebook ad spending, independent political expenditures, the Cook Political Report, and campaign contributions. We find that businesses in electorally important states, districts, and sectors receive more loans following the onset of the COVID-19 crisis, controlling for funding demand and both health and economic conditions. Estimates from survey and observational data show that electoral politics and the allocation of government funds affect employment, small-business activity, and business applications.

Suggested Citation

  • Duchin, Ran & Hackney, John, 2021. "Buying the Vote? The Economics of Electoral Politics and Small-Business Loans," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(7), pages 2439-2473, November.
    • Handle: RePEc:cup:jfinqa:v:56:y:2021:i:7:p:2439-2473_6
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    Cited by:

    1. Li, Xiang, 2022. "The role of state-owned banks in crises: Evidence from German banks during COVID-19," IWH Discussion Papers 6/2022, Halle Institute for Economic Research (IWH), revised 2022.

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