Politicians 'On Board'! Do Political Connections Affect Banking Activities in Italy?

27 Pages Posted: 21 Sep 2011  

Alessandro Carretta

University of Rome, Tor Vergata - Faculty of Economics

Vincenzo Farina

University of Rome, Tor Vergata - Faculty of Economics; University of Rome, Tor Vergata - Department of Financial and Quantitative Economics

Abhishek Gon

affiliation not provided to SSRN

Antonio Parisi

affiliation not provided to SSRN

Date Written: June 30, 2011

Abstract

This paper analyzes the effects of political presence in the boards of directors of cooperative banks. We refer our analysis to all politicians (almost 160.000) belonging to a political body in Italy. Overall, our dataset contains 1.858 board members referring to 127 cooperative banks.

Results show that politically connected banks, in which politicians have executive roles in the board of directors, display higher net interest revenues, lower quality of the loans portfolio and lower efficiency relative to a control group of non-connected counterparts.

Therefore, in the current debate on the reform of the statutes of the Italian cooperative banks, we argue that the problem is not for politicians to be in the boards but for them to hold executive positions.

Keywords: cooperative banks, politics, corporate governance

JEL Classification: G21, G34

Suggested Citation

Carretta, Alessandro and Farina, Vincenzo and Gon, Abhishek and Parisi, Antonio, Politicians 'On Board'! Do Political Connections Affect Banking Activities in Italy? (June 30, 2011). Available at SSRN: https://ssrn.com/abstract=1930891 or http://dx.doi.org/10.2139/ssrn.1930891

Alessandro Carretta

University of Rome, Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Vincenzo Farina (Contact Author)

University of Rome, Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy
+390672595433 (Phone)
+39062040219 (Fax)

HOME PAGE: http://www.economia.uniroma2.it/nuovo/facolta/docenti/docenti.asp?IdProfessore=285

University of Rome, Tor Vergata - Department of Financial and Quantitative Economics ( email )

Via Columbia n.2
Roma, 00133
Italy

Abhishek Gon

affiliation not provided to SSRN ( email )

Antonio Parisi

affiliation not provided to SSRN ( email )

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