Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/183328
Authors: 
Koetter, Michael
Popov, Alexander
Year of Publication: 
2018
Series/Report no.: 
ECB Working Paper 2146
Abstract: 
We exploit election-driven turnover in State and local governments in Germany to study how banks adjust their securities portfolios in response to the loss of political connections. We find that local savings banks, which are owned by their host county and supervised by local politicians, increase significantly their holdings of home-State sovereign bonds when the local government and the State government are dominated by different political parties. Banks' holdings of other securities, like federal bonds, bonds issued by other States, or stocks, are not affected by election outcomes. We argue that banks use sub-sovereign bond purchases to gain access to politically distant government authorities.
Subjects: 
political connections
government-owned banks
sub-sovereign debt
JEL: 
G21
H63
P16
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3251-6
Document Type: 
Working Paper

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