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

59 Pages Posted: 14 Jan 2014

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: December 30, 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, stock markets, voting franchise

JEL Classification: D720, G100, O160, P160

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 (December 30, 2013). CESifo Working Paper Series No. 4527. Available at SSRN: https://ssrn.com/abstract=2378239

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 )

Avenue Willy Brandt
Euralille, 59777
France

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
61
Abstract Views
506
rank
63,509
PlumX Metrics