Politics and banking in Russia: the rise of Putin

We investigate whether lending by the dominant Russian state bank, Sberbank, contributed to Vladimir Putin’s ascent to power during the presidential elections of March2000. Our hypothesis is that Sberbank corporate loans were used as incentives for managers at private firms to mobilize employees to vote for Putin. In line with our proposed voter mobilization mechanism, we find that the growth of regional corporate Sberbank loans in the months before the presidential election is related to the regional increase in votes for Putin and to the regional increase in voter turnout between the Duma election of December1999 and the presidential election of March2000. The effect is pronounced in regions where the governor is affiliated with the regime and in regions with extensive private employment, and less apparent in regions bequeathed with single-company towns, where voter intimidation suffices to get the required result. The results are highly robust.