Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232480 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8883
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We 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 effient provinces and industries suffer the greatest constraints, reducing aggregate productivity.
Subjects: 
bank credit
electoral cycle
state-owned banks
misallocation
JEL: 
G21
D72
D73
P16
Document Type: 
Working Paper
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