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Politics And Banking In Russia: The Rise Of Putin

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  • Koen Schoors

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  • Laurent Weill

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Abstract

We investigate whether lending by the dominant Russian state bank, Sberbank, contributed to Vladimir Putin’s ascent to power during the presidential elections of March 2000. Our hypothesis is that Sberbank corporate loans were used as incentives for managers at private firms to mobilize employees to vote for Putin. In line with our proposed voter mobilization mechanism, we find that the growth of regional corporate Sberbank loans in the months before the presidential election is related to the regional increase in votes for Putin and to the regional increase in voter turnout between the Duma election of December 1999 and the presidential election of March 2000. The effect of Sberbank firm lending on Putin votes is most pronounced in regions where the governor is affiliated with the regime and in regions with extensive private employment. The effect is less apparent in regions with a large part of their population living in single-company towns, where voter intimidation is sufficient to get the required result. Additional robustness checks and placebo regressions confirm the main findings. Our results support the view that additional Sberbank corporate loans granted prior to the March 2000 presidential election facilitated Putin’s early electoral success.

Suggested Citation

  • Koen Schoors & Laurent Weill, 2019. "Politics And Banking In Russia: The Rise Of Putin," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 19/951, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:19/951
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    1. Fungáčová, Zuzana & Schoors, Koen & Solanko, Laura & Weill, Laurent, 2020. "Political cycles and bank lending in Russia," BOFIT Discussion Papers 8/2020, Bank of Finland, Institute for Economies in Transition.

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    More about this item

    Keywords

    bank; credit policy; politics; Russia.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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