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

43 Pages Posted: 5 Jun 2018

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: June 2018

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.

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 (June 2018). The Economic Journal, Vol. 128, Issue 611, pp. 1433-1475, 2018. Available at SSRN: https://ssrn.com/abstract=3190731 or http://dx.doi.org/10.1111/ecoj.12459

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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