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Electoral Cycles in Savings Bank Lending

Author

Listed:
  • Florian Englmaier
  • Till Stowasser
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.

Suggested Citation

  • Florian Englmaier & Till Stowasser, 2013. "Electoral Cycles in Savings Bank Lending," CESifo Working Paper Series 4402, CESifo.
  • Handle: RePEc:ces:ceswps:_4402
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    bank lending cycles; political business cycles; political connectedness; public banks; government ownership of firms;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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