The Determinants of Banks' Lobbying Activities before and during the 2007-2009 financial crisis

54 Pages Posted: 15 Mar 2011 Last revised: 19 May 2018

See all articles by Rajna Gibson

Rajna Gibson

European Corporate Governance Institute (ECGI); University of Geneva - Geneva Finance Research Institute (GFRI)

Alper Odabasioglu

Bank of Canada; London School of Economics & Political Science (LSE) - Systemic Risk Centre

Miret Padovani

Vienna University of Economics and Business

Date Written: May 1, 2018

Abstract

In this paper, we examine the relationship between banks' lobbying activities, their size, financial strength, sources of income, and agency problems, before and during the 2007-2009 financial crisis. First, we find that banks are more likely to lobby when they are larger, have more vulnerable balance sheets, are less creditworthy, and have more diversified business profiles. We next find that banks engaged in non-traditional businesses, e.g. securitization and trading, or in highly regulated businesses, e.g. insurance, hire more lobbyists and spend larger amounts on lobbying. We also show that a bank's agency conflicts can explain its more intense lobbying efforts. Finally, we observe that the announcement of the Dodd-Frank bill led to increased lobbying by banks with higher trading revenues.

Keywords: banking, lobbying, networks, political connections, financial crisis, financial regulatory reform, Dodd-Frank bill, Volcker rule

JEL Classification: G01, G21, G28

Suggested Citation

Gibson, Rajna and Odabasioglu, Alper and Padovani, Miret, The Determinants of Banks' Lobbying Activities before and during the 2007-2009 financial crisis (May 1, 2018). Available at SSRN: https://ssrn.com/abstract=1785435 or http://dx.doi.org/10.2139/ssrn.1785435

Rajna Gibson

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland
+41.22.379.89.83 (Phone)

Alper Odabasioglu (Contact Author)

Bank of Canada ( email )

234 Wellington Street
Ottawa, Ontario K1A 0G9
Canada

London School of Economics & Political Science (LSE) - Systemic Risk Centre ( email )

Houghton St
London
United Kingdom

Miret Padovani

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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