Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/187671 
Year of Publication: 
2018
Series/Report no.: 
DIW Discussion Papers No. 1771
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
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 pressure the riskier the respective local bank exposure becomes. This effect holds for local banks which are under some control of local politicians, it has increased with the release of stimulus packages requiring local co-financing and it is stronger if politicians hold chairmen positions in bank boards.
Subjects: 
Bank Lending
Bank Risk Exposure
Local Politicians
Promotion Pressure
JEL: 
G21
G23
H74
Document Type: 
Working Paper

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