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

European Banking Center Discussion Paper No. 2013-008

CentER Discussion Paper Series No. 2013-046

59 Pages Posted: 30 Aug 2013

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: August 29, 2013

Abstract

Initially, voting rights were 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 uncertainty and financial returns from stock markets. Our panel data evidence covering 1830-1999 shows that tighter restrictions on the voting franchise induce a greater stock market development, whereas a broader voting franchise is more conducive towards the banking sector, consistent with Perotti and von Thadden (2006). Our results are robust to controlling for other political determinants and endogeneity.

Keywords: banking sector, financial development, financial structure, political economy

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 (August 29, 2013). European Banking Center Discussion Paper No. 2013-008. Available at SSRN: https://ssrn.com/abstract=2317673 or http://dx.doi.org/10.2139/ssrn.2317673

Hans Degryse (Contact Author)

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

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 )

Avenue Willy Brandt
Euralille, 59777
France

HOME PAGE: http://sites.google.com/view/armin-schwienbacher

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