Political Influence, Bank Capital, and Credit Allocation

• 成果类型: Article
• 署名作者: Huang, Sheng; V. Thakor, Anjan
• 署名单位: China Europe International Business School; Washington University (WUSTL); European Corporate Governance Institute
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.04056
• 发表日期: 2024
• 关键词: politics; Bank regulation; Capital requirements

摘要

Political influence on bank credit allocation is often viewed as being necessary to address social problems like income inequality. We hypothesize that such influence elicits bank capital responses. Our hypothesis yields three testable predictions for which we find supporting evidence. First, when banks observe election outcomes that suggest greater impending political credit -allocation influence, they reduce capital to increase fragility and deter political influence. Second, banks subject to greater political influence nonetheless increase lending that politicians favor, and household consumption consequently increases. Third, these banks exhibit poorer post -lending performance. Our study has implications for the interaction between politics, household consumption, and bank risk through a specific channel-the interplay between credit -allocation regulation and bank capital structure.