Political connections and preferential lending at local level: Some evidence from the Italian credit market

Politicians ‘on Board’: Do Political Connections Affect Banking Activities in Italy?

“…The composition of the boards is obtained from the Annual Relations of the cooperative banks. Following Infante and Piazza (2010), we identify politically connected banks by matching the names of the members on the boards with the names of the members of the Italian political body during the year 2006. We consider the national Parliament and all the local councils (in the 20 Italian regions, the 103 provinces, or in the 8,094 municipalities).…”

“…Finally, Infante and Piazza (2010) find evidence that politically connected firms benefit from lower interest rates only when the political connection is at a local level. They show that this effect is generally stronger when politically connected firms borrow from banks with politicians on their boards and when the degree of autonomy granted to local loan officers is higher.…”

Political connections and corporate performance: Evidence from Pakistan

“…This study advances the existing literature along three lines. Firstly, our research contributes to a growing literature by exploring the likely channels through which political benefits may be realized (Baum, Caglayan, Schäfer, & Talavera, ; Faccio, ; Infante & Piazza, ; Li et al., ). We further show that political benefits depend on the type and strength of political connection.…”

The Resource Effect of Political Connections

“…Political connection as a signal of enterprise business efficiency can reduce the business risks of private enterprises, avoid credit discrimination and pass the image of good prospect and social reputation to the public. Equivalent to an invisible government guarantees, political connection smoothes the degree of information asymmetry between capital supply and demand [7] , playing an important role in debt contracts with more favorable loan conditions and lower loan interest rates available [8] . Accordingly, we put forward the hypothesis 1.…”