Lending cycles and real outcomes : Costs of political misalignment

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dc.contributor Bank of Finland
dc.contributor.author Bircan, Çağatay
dc.contributor.author Saka, Orkun
dc.date.accessioned 2019-01-22T10:13:47Z
dc.date.available 2019-01-22T10:13:47Z
dc.date.issued 2019
dc.identifier.isbn 978-952-323-259-4
dc.identifier.issn 1456-5889
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/16028
dc.description.abstract 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.
dc.format.extent 86
dc.language.iso ENG
dc.rights https://helda.helsinki.fi/bof/copyright
dc.subject Bofit-kokoelma
dc.subject SP
dc.subject RP ST
dc.subject Turkki
dc.subject yritysluotot
dc.subject valtion pankit
dc.subject syklit
dc.subject.other Bank credit
dc.subject.other Electoral cycle
dc.subject.other State-owned banks
dc.subject.other Credit misallocation
dc.title Lending cycles and real outcomes : Costs of political misalignment
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-201901221040
dc.subject.jel G21
dc.subject.jel D72
dc.subject.jel D73
dc.subject.jel P16
dc.series.name BOFIT Discussion Papers
dc.series.year 2019
dc.series.number 1/2019
dc.series.sortingnumber 0001
dc.date.publication 21.1.2019
dc.subject.yso pankit
dc.subject.yso luotonanto
dc.subject.yso vaalit
dc.subject.yso politiikka
dc.subject.yso luotot
dc.subject.yso yritykset
dc.contributor.orgunit Institute for Economies in Transition (BOFIT)
dc.type.okm D4

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