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Politicizing Consumer Credit

60 Pages Posted: 27 Sep 2017  

Pat Akey

University of Toronto - Rotman School of Management

Rawley Heimer

Boston College - Department of Finance

Stefan Lewellen

London Business School

Date Written: September 6, 2017


Using proprietary credit bureau data, we find that consumers’ access to credit decreases by 4.5 percent–8 percent when the borrower’s home-state U.S. senator becomes the chair of a powerful Senate committee. The reduction in credit access mostly affects historically credit-constrained consumers (low income and nonwhite and borrowers with poor credit scores), and is stronger in areas with less politically engaged constituents and more politically connected lenders. Additional evidence supports a “political protection” hypothesis—banks that are connected to powerful politicians consider fair-lending regulatory guidelines to be less binding. The results highlight the distinction between political power and legislative outcomes, and contrast recent findings that governments expand credit access to firms and consumers.

Keywords: Access to Credit, Political Protection Hypothesis

JEL Classification: G21, D72

Suggested Citation

Akey, Pat and Heimer, Rawley and Lewellen, Stefan, Politicizing Consumer Credit (September 6, 2017). FRB of Cleveland Working Paper No. 17-16. Available at SSRN:

Pat Akey

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4

Rawley Heimer (Contact Author)

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

Stefan M. Lewellen

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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