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Elections for sale? Evidence from cash transactions around elections in Italy

Author

Listed:
  • Giuseppe De Feo
  • Giacomo De Luca
  • Mario Gara
  • Marianna Siino

Abstract

This paper studies the dynamics of electoral corruption in the context of local elections in Italy. It exploits the asynchronous nature in the timing of mayoral elections to estimate a relationship between elections and the municipality-level amount exchanged through cash transactions. Cash transactions are sourced from a unique comprehensive dataset, taken from the Aggregate Anti–Money Laundering (AML) Reports between 2008 and 2018, which all Italian financial intermediaries are mandated to file with reference to transactions worth \euro 15,000 or more. The difference-in-difference estimates, including municipality and time fixed effects, suggest that the municipal elections in Italy systematically trigger an anomalous increase in the volume of cash transactions, which we interpret as evidence of electoral corruption, i.e. an intense circulation of money to secure electoral support in the shadow of the law. Exploring the heterogeneity of our main result along several potential mediating factors confirms some intuitively appealing patterns, such as tighter competition, the presence of active criminal organizations, as well as the size of the municipality budget, let us show which significantly affects the volume of cash transactions. Our results can be used to define better anticorruption policies on political campaign practices specifically focusing on cash payments. The same approach can be easily applied to other countries and contexts, by drawing on the data submitted to AML authorities by financial intermediaries.

Suggested Citation

  • Giuseppe De Feo & Giacomo De Luca & Mario Gara & Marianna Siino, 2024. "Elections for sale? Evidence from cash transactions around elections in Italy," Working Papers 202403, University of Liverpool, Department of Economics.
    • Handle: RePEc:liv:livedp:202403
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    References listed on IDEAS

    as
    1. Alberto Alesina & Salvatore Piccolo & Paolo Pinotti, 2019. "Organized Crime, Violence, and Politics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 457-499.
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    More about this item

    Keywords

    D72; D73; F33; G28; K42;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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