Elections, Political Competition and Bank Failure
AbstractWe 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.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43603.
Date of creation: 16 Oct 2012
Date of revision:
bank failure; elections; political competition;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-12 (All new papers)
- NEP-CDM-2013-01-12 (Collective Decision-Making)
- NEP-POL-2013-01-12 (Positive Political Economics)
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