Arbeitspapier

Political cycles and bank lending in Russia

State-owned banks tend to increase lending before elections for the purpose of boosting the re-election odds of incumbent politicians. We employ monthly data on individual banks to study whether Russian banks increased their lending before presidential elections during 2004-2019, a period covering four presidential elections. In contrast to the literature, we find that both state-owned and private banks increased their lending before presidential elections. This result stands for all loans, as well as separately for firm and household loans. The pre-election lending surge is followed by a deterioration of loan quality the following year, indicating the lending increase was not driven by higher growth prospects or some positive economic shock. The effect is substantially greater for large banks and banks more involved in lending activities. Our main finding that all types of banks in Russia increase their lending before presidential elections supports the view that the authorities in an electoral autocracy like Russia can influence lending of both private and state-owned banks for political reasons.

ISBN
978-952-323-319-5
Language
Englisch

Bibliographic citation
Series: BOFIT Discussion Papers ; No. 8/2020

Classification
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Socialist Institutions and Their Transitions: Financial Economics
Subject
bank
lending
politics
Russia

Event
Geistige Schöpfung
(who)
Fungáčová, Zuzana
Schoors, Koen
Solanko, Laura
Weill, Laurent
Event
Veröffentlichung
(who)
Bank of Finland, Institute for Economies in Transition (BOFIT)
(where)
Helsinki
(when)
2020

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Fungáčová, Zuzana
  • Schoors, Koen
  • Solanko, Laura
  • Weill, Laurent
  • Bank of Finland, Institute for Economies in Transition (BOFIT)

Time of origin

  • 2020

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