The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries

Economic Journal, 2018, 128(611), 1433-1475.

68 Pages Posted: 25 Aug 2013 Last revised: 6 Jul 2019

See all articles by Hans Degryse

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance; Centre for Economic Policy Research (CEPR)

Thomas Lambert

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Armin Schwienbacher

SKEMA Business School

Multiple version iconThere are 6 versions of this paper

Date Written: September 19, 2016

Abstract

Voting rights were initially limited to wealthy elites providing political support for stock markets. The franchise expansion induces the median voter to provide political support for banking development, as this new electorate has lower financial holdings and benefits less from the riskiness and financial returns from stock markets. Our panel data evidence covering the years 1830–1999 shows that tighter restrictions on the voting franchise induce greater stock market development, whereas a broader voting franchise is more conducive to the banking sector, consistent with Perotti and von Thadden (2006). The results are robust to controlling for other institutional arrangements and endogeneity.

Keywords: banking sector, financial development, financial structure, political economy, stock markets, suffrage institutions

JEL Classification: D72, G10, O16, P16

Suggested Citation

Degryse, Hans and Lambert, Thomas and Schwienbacher, Armin, The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries (September 19, 2016). Economic Journal, 2018, 128(611), 1433-1475.. Available at SSRN: https://ssrn.com/abstract=2315060 or http://dx.doi.org/10.2139/ssrn.2315060

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas Lambert (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Rotterdam, 3000 DR
Netherlands

HOME PAGE: http://www.sites.google.com/site/lambertthom

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Armin Schwienbacher

SKEMA Business School ( email )

Lille
France

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