AbstractsPolitical Science

Essays on the political economy of finance

by Thomas Lambert

Institution: Université Catholique de Louvain
Department: Research Institute of Louvain School of Management
Year: 2015
Keywords: Banking; Suffrage; Financial markets; Political economy; Lobbying
Record ID: 1076932
Full text PDF: http://hdl.handle.net/2078.1/157817


What are the consequences of countries’ political system on their financial markets and intermediaries? This dissertation proceeds in answering this question along three essays. The first essay focuses on the way suffrage institutions, a key measure of the distribution of political power, shape countries’ reliance on both stock market and bank finance. It provides evidence from the last two centuries that suffrage expansions adversely affect stock market development, consistent with the insight that small elites pursue economic opportunities by promoting capital raised on stock markets. In contrast, it shows a positive effect of suffrage on banking development, consistent with the idea that an empowered middle class favors banks as they share its aversion for risk. The second essay examines the political outcomes driving the pace and extent of financial reforms occurring in the last three decades around the world. It stresses the role of government cohesiveness in explaining patterns of financial liberalizations, finding that fragmented governments do breed stalemate. The third essay explores the incidence and drivers of lobbying efforts made by the U.S. banking industry. It shows that banks engage in lobbying to gain preferential treatment, and take in turn additional risks. (ECGE - Sciences économiques et de gestion)  – UCL, 2015