Private Credit Under Political Influence: Evidence from France

Abstract

We find that credit granted to the private sector increases by 9%-14% in the year during which a powerful incumbent faces a contested election.Banks that grant more credit to private firms in election years gain market share in the local public entity debt market after the election is held.

Political Consequences of (Consumer) Debt Relief

“…Our contribution to the literature on consumer debt relief is to study their political effects. In this way, we add new evidence to the growing literature on political credit cycles which has demonstrated how national and local politicians use their influence on government-controlled banks to adjust lending policies and expand credit in the run-up to elections (Cole 2009;Giné and Kanz 2017;Englmaier and Stowasser 2017;Faraz and Rockmore 2020;Delatte et al 2022).…”

Misallocation and Capital Market Integration: Evidence From India

“…Guner, Ventura, and Xu, 2008;Banerjee and Moll, 2010;Collard-Wexler, Asker, and De Loecker, 2011;Kalemli-Ozcan and Sørensen, 2014). 8 Second, it contributes to the literature on the effects of capital account liberalization, financial frictions, and misallocation (Buera, Kaboski, and Shin;2011;Midrigan and Xu, 2014;Moll, 2014;Hombert and Matray, 2016;Bai, Carvalho, and Phillips, 2018;Delatte, Matray, and Pinardon Touati, 2019).…”

European Banks Are Not Immune to National Elections

“…Carvalho, 2014;Kumar, 2020). The two works analyzing how elections interfere with lending behavior in developed countries are Englmaier and Stowasser (2017) and Delatte, Matray and Pinardon-Touati (2020).…”