Bircan & Saka (2020).pdf (3.5 MB)
Lending cycles and real outcomes: costs of political misalignment
journal contribution
posted on 2023-06-09, 22:47 authored by Çagatay Bircan, Orkun SakaWe document a strong political cycle in bank credit and industry outcomes in Turkey. In line with theories of tactical redistribution, state-owned banks systematically adjust their lending around local elections compared with private banks in the same province based on electoral competition and political alignment of incumbent mayors. This effect only exists in corporate lending and creates credit constraints for firms in opposition areas, which suffer drops in assets, employment and sales but not firm entry. Financial resources and factors of production are misallocated as more efficient provinces and industries suffer the greatest constraints, reducing aggregate productivity.
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- Published
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- Accepted version
Journal
The Economic JournalISSN
0013-0133Publisher
Oxford University PressExternal DOI
Department affiliated with
- Accounting and Finance Publications
Research groups affiliated with
- Business and Finance Research Group Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2021-02-03First Open Access (FOA) Date
2023-03-17First Compliant Deposit (FCD) Date
2021-02-02Usage metrics
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