Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110312
Authors: 
Wang, Li
Menkhoff, Lukas
Schröder, Michael
Xu, Xian
Year of Publication: 
2015
Series/Report no.: 
Working Paper Series, Frankfurt School of Finance & Management 216
Abstract: 
This paper shows that politicians' pressure to climb the career ladder increases bank risk exposure in their region. Chinese local politicians are set growth targets in their region that are relative to each other. Growth is stimulated by debt-financed programs which are mainly financed via bank loans. The stronger the performance incentive the riskier the respective local bank exposure becomes. This effect holds primarily for local banks which are under a certain degree of control of local politicians and it has increased with the release of recent stimulus packages requiring local co-financing.
Subjects: 
Bank Lending
Bank Risk Exposure
Local Politicians
Promotion Incentives
JEL: 
G21
G23
H74
Document Type: 
Working Paper

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