The Political Economy of Financial Innovation: Evidence from Local Governments

• 成果类型: Article
• 署名作者: Perignon, Christophe; Vallee, Boris
• 署名单位: Hautes Etudes Commerciales (HEC) Paris; Harvard University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhx029
• 发表日期: 2017
• 页码: 1903
• 关键词: LENDING RELATIONSHIPS; corporate-investment; BEHAVIOR

摘要

We investigate the development of an innovative and high-risk type of borrowing for local governments, known as structured loans. Using transaction data for more than 2,700 local governments in France, we show that the adoption of these instruments is more frequent for politicians from highly indebted local governments, from politically contested areas, and during political campaigns. Taking on structured loans helps incumbents win a reelection, and initially allows them to maintain lower taxes. Our findings illustrate how financial innovation can amplify principal-agent problems within the political system.