mirage

The Political Economy of Bank Lending

LACER-LACEA/Manakin Repository

Show simple item record

dc.contributor.author Ruiz, Claudia
dc.contributor.author Zhang, Jian
dc.contributor.author Morais, Bernardo
dc.contributor.author Agarwal, Sumit
dc.date.accessioned 2016-03-09T22:15:42Z
dc.date.accessioned 2017-12-16T00:04:13Z
dc.date.available 2016-03-09T22:15:42Z
dc.date.available 2017-12-16T00:04:13Z
dc.date.issued 2016-02
dc.identifier.uri http://hdl.handle.net/10986/23915
dc.description.abstract This study investigates the existence of political rents in bank lending, using a comprehensive loan-level data set of the universe of commercial loans in Mexico from 2003 to 2012. Identification relies on changes in the state of origin of a senate committee chairman as a source of exogenous variation in firms' political relationship. The study finds that banks offer favorable loan terms to politically connected firms with larger loan quantities, lower loan spreads, longer maturities, and lower collateral requirements. Furthermore, political loans exhibit higher default rates. To isolate the bank supply channel, a rich set of fixed-effects is included with various specifications. The favorable lending increases with the strength of a firm's political connection, varies gradually along the political cycle, and is mainly offered by large and domestic banks. Consistent with the quid pro quo hypothesis, the study finds that banks that extend political loans receive significantly more government borrowings with better credit quality. The study also shows that the greater credit supply due to political connection leads to a large and significant increase in firm-level employment and assets. The study provides estimates of the total social cost of political lending and net revenue for banks that are engaged in rent provision activity. Finally, a series of robustness tests are performed to rule out alternative mechanisms and explanations. en
dc.language English
dc.language.iso en_US
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Working Paper;No. 7577
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo/
dc.subject LIQUIDITY
dc.subject BORROWER
dc.subject CONSUMER CREDIT
dc.subject REVENUES
dc.subject ACCOUNTABILITY
dc.subject LOAN QUANTITIES
dc.subject BALANCE SHEETS
dc.subject INTERNATIONAL BANK
dc.subject PRODUCTIVITY
dc.subject LOAN VOLUME
dc.subject BANK LIQUIDITY
dc.subject PROFIT
dc.subject INVESTMENT OPPORTUNITIES
dc.subject DEBT
dc.subject SMALL BANKS
dc.subject LENDING INSTITUTIONS
dc.subject SAVING
dc.subject COLLATERAL REQUIREMENT
dc.subject TRANSPORT
dc.subject COMMERCIAL CREDIT
dc.subject GUARANTEE
dc.subject INTEREST RATE SPREAD
dc.subject LOAN TERMS
dc.subject GOVERNMENTS
dc.subject VALUE
dc.subject ACCESS TO CAPITAL
dc.subject TAX
dc.subject DEVELOPING COUNTRIES
dc.subject ENTERPRISES
dc.subject SMALL BUSINESS
dc.subject NON-PERFORMING LOANS
dc.subject BORROWERS
dc.subject SHAREHOLDERS
dc.subject MATURITY
dc.subject LABOR
dc.subject PUBLIC SECTOR BANKS
dc.subject CORPORATE DEBT
dc.subject BANK PRIVATIZATION
dc.subject CONTRACT
dc.subject BANK SUPERVISION
dc.subject INSTRUMENTS
dc.subject ARREARS
dc.subject FINANCIAL MARKET
dc.subject BASIS POINT
dc.subject FINANCIAL INFORMATION
dc.subject LOAN DATA
dc.subject RESERVE
dc.subject BANKING
dc.subject BANK LENDING
dc.subject HOUSING
dc.subject MARKET FAILURES
dc.subject CAPITAL ALLOCATION
dc.subject POSITIVE COEFFICIENT
dc.subject BANK BALANCE SHEET
dc.subject BAILOUT
dc.subject LENDER
dc.subject BANKS
dc.subject MARKET
dc.subject REGULATORY REPORTS
dc.subject CREDIT AVAILABILITY
dc.subject SOFT BUDGET CONSTRAINTS
dc.subject BANKRUPTCY
dc.subject CREDIT WORTHINESS
dc.subject LEGISLATION
dc.subject EXCHANGE
dc.subject CHECK
dc.subject MARKETS
dc.subject LOAN MARKET
dc.subject SHARES
dc.subject OUTSTANDING AMOUNT
dc.subject BORROWING
dc.subject FUTURE
dc.subject FINANCES
dc.subject ACCOUNTING
dc.subject GOVERNMENT BANKS
dc.subject LENDING DECISIONS
dc.subject RETURNS
dc.subject FINANCIAL CRISIS
dc.subject PUBLIC BANKS
dc.subject LIABILITIES
dc.subject TRADING
dc.subject PUBLIC SAVING
dc.subject PUBLIC SERVICES
dc.subject LOAN PERFORMANCE
dc.subject TRANSACTIONS
dc.subject GOVERNMENT LENDING
dc.subject LAWS
dc.subject CREDIT QUALITY
dc.subject INSIDER TRADING
dc.subject STRATEGIES
dc.subject MONETARY POLICY
dc.subject LOAN DEMAND
dc.subject COMMERCIAL LOANS
dc.subject SAVINGS
dc.subject BUDGET CONSTRAINTS
dc.subject INDUSTRY
dc.subject ECONOMIC CONDITIONS
dc.subject SOFT BUDGET CONSTRAINT
dc.subject DUMMY VARIABLES
dc.subject DEBTS
dc.subject SECURITIES
dc.subject BENEFICIARIES
dc.subject COMMERCIAL BANK
dc.subject FOREIGN BANKS
dc.subject BAD DEBTS
dc.subject BALANCE SHEET
dc.subject CREDIT MARKET
dc.subject POLITICAL ECONOMY
dc.subject LOAN MATURITY
dc.subject DEFAULT
dc.subject MORAL HAZARD
dc.subject BASIS POINTS
dc.subject COLLATERAL
dc.subject BANKING SECTOR
dc.subject FINANCE
dc.subject OUTSTANDING DEBT
dc.subject LOANS
dc.subject LENDING DECISION
dc.subject PRIVATE BANKS
dc.subject FINANCIAL STUDIES
dc.subject EMERGING MARKET
dc.subject PRIVATIZATION
dc.subject LOAN SIZE
dc.subject DEFAULT PROBABILITY
dc.subject PROBABILITY OF DEFAULT
dc.subject SHARE
dc.subject CHECKS
dc.subject LOAN CONTRACT
dc.subject EMPLOYMENT
dc.subject BANK LOANS
dc.subject DOMESTIC BANKS
dc.subject INTEREST
dc.subject BUSINESS CYCLES
dc.subject RESOURCE ALLOCATION
dc.subject GOVERNMENT BORROWINGS
dc.subject MATURITIES
dc.subject MORTGAGE
dc.subject BANKING INDUSTRY
dc.subject RISK
dc.subject TAXATION
dc.subject REVENUE
dc.subject DEFAULT RATE
dc.subject GOVERNMENT BORROWING
dc.subject SMALL BUSINESS LENDING
dc.subject PORTFOLIOS
dc.subject RENEGOTIATION
dc.subject INFORMATION SYSTEM
dc.subject TERMS OF CREDIT
dc.subject CONTRACTS
dc.subject ECONOMICS
dc.subject GOVERNANCE
dc.subject FINANCIAL MARKETS
dc.subject ASYMMETRIC INFORMATION
dc.subject SERVICES
dc.subject INDIVIDUAL LOANS
dc.subject TREASURY
dc.subject COMMERCIAL BANKS
dc.subject LOAN
dc.subject INTERNATIONAL ECONOMICS
dc.subject FOREIGN BANK
dc.subject INTEREST INCOME
dc.subject BUDGET
dc.subject SMALL BORROWERS
dc.subject OWNERSHIP STRUCTURE
dc.subject OPTIONS
dc.subject DEFAULT RATES
dc.subject MACROECONOMIC ENVIRONMENT
dc.subject TAXES
dc.subject FEDERAL RESERVE
dc.subject GOVERNMENT BANK
dc.subject LOAN SPREADS
dc.subject LOAN PORTFOLIOS
dc.subject BUSINESS CYCLE
dc.subject PROJECTS
dc.subject LOAN SPREAD
dc.subject GOOD
dc.subject INTEREST RATE
dc.subject LENDING
dc.subject TELECOMMUNICATIONS
dc.subject DUMMY VARIABLE
dc.subject DEBT MATURITY
dc.subject INVESTMENT
dc.subject BUDGET CONSTRAINT
dc.subject DEBTOR
dc.subject RETURN
dc.subject BANK
dc.subject SUPPLY OF CREDIT
dc.subject PUBLIC SPENDING
dc.subject TREATIES
dc.subject BANK SIZE
dc.subject CREDIT
dc.subject ECONOMIC DEVELOPMENT
dc.title The Political Economy of Bank Lending en
dc.type Working Paper en
dc.rights.holder World Bank
dc.title.subtitle Evidence from an Emerging Market


Files in this item

Files Size Format View

There are no files associated with this item.

This item appears in the following Collection(s)

Show simple item record

CC BY 3.0 IGO Except where otherwise noted, this item's license is described as CC BY 3.0 IGO

Search LACER-LACEA


Browse

My Account