Banks' Lobbying Determinants: Insights from the GFC and the Trump Presidency

Abstract

This study examines the relationship between banks' main financial and business characteristics and their lobbying intensity during the last two decades. A novel feature of our analysis is that we adopt a network perspective to measure banks' lobbying intensity. We find that banks are more likely to lobby when they are larger, less creditworthy, venture into non-traditional businesses and face higher agency conflicts. Next, we observe that subsequent to the GFC and with the announcement of the Dodd-Frank bill, there was a significant increase in lobbying undertaken by banks with higher revenues stemming from trading and securitization. Finally, during the Trump Presidency, banks with higher trading revenues lobbied significantly more.

Keywords: banking, deregulation, Dodd-Frank bill, Global Financial Crisis, lobbying, networks, Trump Presidency, Volcker rule

JEL Classification: G01, G21, G28