Electoral Vulnerability and Subsidized Small Business Lending: Evidence from Gerrymandering

60 Pages Posted: 7 Jun 2019 Last revised: 2 Oct 2019

See all articles by Sahil Raina

Sahil Raina

Alberta School of Business, University of Alberta

Sheng-Jun Xu

University of Alberta - School of Business

Date Written: May 30, 2019

Abstract

We study how electoral competition affects government-subsidized small business loans to congressional districts. To identify the causal impact of electoral competitiveness, we examine politically-motivated congressional redistricting ("gerrymandering") and exploit the discontinuity in post-redistricting electoral competitiveness between districts where redistricting party incumbents narrowly won and narrowly lost the pre-redistricting election. Using a regression discontinuity design, we find that districts with electorally vulnerable Congressional Representatives receive more Small Business Administration (SBA) loans than districts with more entrenched Representatives, and this leads to higher local employment and wage growth in the short run.

Keywords: small business loans, political competition, gerrymandering, redistricting, employment growth

JEL Classification: P16, H81, G28, D72

Suggested Citation

Raina, Sahil and Xu, Sheng-Jun, Electoral Vulnerability and Subsidized Small Business Lending: Evidence from Gerrymandering (May 30, 2019). University of Alberta School of Business Research Paper No. 2019-505. Available at SSRN: https://ssrn.com/abstract=3396699 or http://dx.doi.org/10.2139/ssrn.3396699

Sahil Raina

Alberta School of Business, University of Alberta ( email )

2-32B Business Building
Edmonton, Alberta T6G 2R6
Canada

HOME PAGE: http://sites.ualberta.ca/~sraina/

Sheng-Jun Xu (Contact Author)

University of Alberta - School of Business ( email )

2-43 Business Building
Edmonton, Alberta T6G 2C7
Canada

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