Lending cycles and real outcomes : Costs of political misalignment

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Nimeke: Lending cycles and real outcomes : Costs of political misalignment
ISBN: 978-952-323-259-4
Tekijä: Bircan, Çağatay ; Saka, Orkun
Julkaisija: Bank of Finland
Osasto / Yksikkö: Institute for Economies in Transition (BOFIT)
Sarjan nimi: BOFIT Discussion Papers
ISSN: 1456-5889
Sarjan vuosi: 2019
Sarjan numero: 1/2019
Julkaisuvuosi: 2019
Ilmestymispäivämäärä: 21.1.2019
Sivut: 86
Asiasanat (yso): pankit; luotonanto; vaalit; politiikka; luotot; yritykset
Hakusanat: Bofit-kokoelma; Turkki; yritysluotot; valtion pankit; syklit
JEL: G21; D72; D73; P16
Muut hakusanat: Bank credit; Electoral cycle; State-owned banks; Credit misallocation
Tiivistelmä: We use data on the universe of credit in Turkey to document a strong political lending cycle. State-owned banks systematically adjust their lending around local elections compared with private banks in the same province. There is considerable tactical redistribution: state-owned banks increase credit in politically competitive provinces which have an incumbent mayor aligned with the ruling party, but reduce it in similar provinces with an incumbent mayor from the opposition parties. This effect only exists in corporate lending as opposed to consumer loans, suggesting that tactical redistribution targets job creation to increase electoral success. Political lending influences real outcomes as credit-constrained opposition areas suffer drops in employment and firm sales. There is substantial misallocation of financial resources as credit constraints most affect provinces and industries with high initial efficiency.
Tekijänoikeustiedot: https://helda.helsinki.fi/bof/copyright


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