27 Pages Posted: 21 Sep 2011
Date Written: June 30, 2011
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: 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