Do partisan politics influence domestic credit?

Date

2022-08-18

Advisors

Journal Title

Journal ISSN

ISSN

1744-1382

Volume Title

Publisher

Cambridge University Press

Type

Article

Peer reviewed

Yes

Abstract

Left-leaning and right-leaning governments hold opposing views on economic policy, resulting in disparities in economic behaviours and outcomes. Given this context, we explore the effect of political ideology on domestic credit using an unbalanced panel data of 29 countries from 1960 to 2014. Our empirical analysis shows that left-leaning governments reduce total domestic credit allocations. Also, we find that right-leaning governments provide more credit to the private sector, while left-leaning governments prefer to boost domestic credit to the public sector. In a further analysis, we show that political parties and their domestic credit strategies remain unchanged even during electoral periods. Our novel insights, that are robust to alternative measures, samples, and a set of econometric identifications, contribute to the literature on partisan politics and lending behaviour.

Description

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.

Keywords

Domestic Credit, Political Ideology

Citation

Tawiah, V., Nadarajah, S., Alam, M., & Allen, T. (2022) Do partisan politics influence domestic credit? Journal of Institutional Economics, pp. 1-22

Rights

Research Institute

Institute for Applied Economics and Social Value (IAESV)