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Political Influence and TARP Investments in Credit Unions

Author

Listed:
  • Elisabeta Pana

    (Department of Business Administration, Illinois Wesleyan University, CLA 324 Bloomington, IL 61701, USA)

  • Linus Wilson

    (Department of Economics & Finance, B.I. Moody III College of Business, University of Louisiana, 214 Hebrard Boulevard, Moody Hall 253, P.O. Box 44570, Lafayette, LA 70504-4570, USA)

Abstract

About 48 credit unions received capital injections as part of the financial sector bailout. The predicted probability of receiving bailout funds jumps from 29% to 81% for the typical credit union, if the institution's headquarters was in the district of a member of the U. S. House Financial Services Committee (HFS). The credit unions receiving funds were significantly less likely to lend, contrary to the goals of the program. These results indicate that political influence may be an important determinant of which institutions receive taxpayer funds.

Suggested Citation

  • Elisabeta Pana & Linus Wilson, 2012. "Political Influence and TARP Investments in Credit Unions," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 1-26.
    • Handle: RePEc:wsi:qjfxxx:v:02:y:2012:i:04:n:s2010139212500176
    DOI: 10.1142/S2010139212500176
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    Citations

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    Cited by:

    1. Linus Wilson & Yan Wu & Stephanie Prejean, 2014. "Are the Bailouts of Wall Street Complements or Substitutes?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(1), pages 21-38, March.
    2. Wilson, Linus & Wu, Yan Wendy, 2018. "Overpaid CEOs got FDIC debt guarantees," The North American Journal of Economics and Finance, Elsevier, vol. 45(C), pages 101-115.
    3. Vuk Vukovic, 2021. "The politics of bailouts: Estimating the causal effects of political connections on corporate bailouts during the 2008–2009 US financial crisis," Public Choice, Springer, vol. 189(1), pages 213-238, October.
    4. Haselmann, Rainer & Kick, Thomas & Behn, Markus & Vig, Vikrant, 2015. "The Political Economy of Bank Bailouts," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113082, Verein für Socialpolitik / German Economic Association.
    5. Md. Jahir Uddin Palas & Fernando Moreira, 2022. "The impact of government assistance on banks' efficiency," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1731-1748, April.

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