Debt in Political Campaigns

73 Pages Posted: 5 Jul 2016 Last revised: 30 Jan 2018

Alexei V. Ovtchinnikov

HEC Paris - Finance Department

Philip Valta

University of Bern

Date Written: January 29, 2018


Debt is a significant source of funding of political campaigns, with almost half of all campaigns relying on some form of debt. We analyze the incentives created by this type of debt financing. We show that indebted politicians raise more funds in subsequent elections, especially from special interest groups. Consistent with votes-for-money arrangements, indebted politicians vote for the benefit of those interest groups that help funding their reelection campaigns. The findings support the hypothesis that debt creates distortions, as it forces indebted politicians to take policy positions that are not aligned with the local constituents’ interests.

Keywords: Debt financing, Political campaigns, Voting behavior

JEL Classification: G32, G38, L51, D72

Suggested Citation

Ovtchinnikov, Alexei V. and Valta, Philip, Debt in Political Campaigns (January 29, 2018). HEC Paris Research Paper No. FIN-2016-1165; Paris December 2017 Finance Meeting EUROFIDAI - AFFI. Available at SSRN: or

Alexei V. Ovtchinnikov (Contact Author)

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351

Philip Valta

University of Bern ( email )

Engehaldenstrasse 4
Bern, 3012

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