@phdthesis{Markgraf, author = {Markgraf, Jonas}, title = {Politicians as Bankers. The Mechanisms and Consequences of Politically Influenced Banking}, school = {Hertie School}, pages = {177}, abstract = {Linkages between politics and banks are prevalent in developing and advanced countries and take various shapes. Among the more overt forms of political interference is direct political control over individual banks. Yet, the channels through which politicians exert control over banks and how they benefit from ties to banks is not entirely clear. This dissertation uses granular panel data from politically influenced and publicly owned banks in Germany and Spain and conducts a systematic, quantitatively rigorous analysis of the mechanisms and political consequences of political control over banks. The cumulative dissertation addresses three related questions: chapter 2 asks whether appointments to banks are politically motivated and considers its potential implications for bank managers' career incentives. It looks at appointment patterns of bank managers in formally independent Spanish savings banks and finds that banks' managers face an increased turnover risk shortly after elections and under new governments. Coalition partners and banks' institutional architecture, however, constrain politicians' ability to replace bank managers. The findings reveal political patronage in independent banks and show that politicians wield considerable influence even in banks that are not publicly owned. In chapter 3, the dissertation examines how politics within banks' boards influences banks' loan provision before elections and focuses on the role of politicians in boards of German savings banks. Using detailed information about political representation in bank boards and loan data, I show that election-induced lending is pronounced (i) when the chairperson of the bank holds a political office, (ii) when the board consists of many politicians, and (iii) when political board members come from the same party. The effect is driven by savings banks with political chairpersons from counties and from the conservative party. Finally, chapter 4 is concerned with the electoral consequences of politics-bank linkages and asks whether politicians benefit from those ties. I consider the case of German savings banks to assess whether board seats in banks give local politicians a leg up in elections. I find that mayors with a savings bank seat have higher odds of winning reelection than mayors without a seat and show that, in particular, conservative mayors benefit from bank connections. The dissertation, hence, presents empirical evidence about the politics of politically influenced banking unveiling the channels through which politicians control banks and how they benefit electorally from it.}, language = {en} } @article{HallerbergMarkgraf, author = {Hallerberg, Mark and Markgraf, Jonas}, title = {The Corporate Governance of Public Banks before and after the Global Financial Crisis}, series = {Global Policy}, volume = {9}, journal = {Global Policy}, number = {Special Issue}, issn = {1758-5899}, doi = {10.1111/1758-5899.12562}, pages = {43 -- 53}, abstract = {During the 2008-09 financial crisis, many states were forced to nationalize faltering private banks. But also public banks ran into trouble and market actors continue to worry about their stability and crisis resilience. During the crisis, German public Landesbanken and Spanish public Cajas were hit hard. Yet, German public Sparkassen emerged strengthened from the crisis. This calls for a closer examination of the regulatory framework and corporate governance of public banks. We compare how corporate governance choices affected the financial crisis performance of public banks in three countries. Italy that had privatized its extensive public banking sector over the past decades; Spain that had problems with its savings banks during the crisis, which were eventually privatized or shut down; and Germany whose public savings banks navigated the financial crisis relatively well while its public Landesbanken got into serious trouble, and where calls for privatizing public banks resurface periodically. The paper considers the question whether Italy's banking crisis is partly rooted in the legacies of its formerly public banks and how the privatization of public banks in Spain and Italy can inform the debate in Germany and in other European Union countries with significant public banking sectors.}, language = {en} } @periodical{AnheierEichengreenLombardietal., author = {Anheier, Helmut K. and Eichengreen, Barry and Lombardi, Domenico and Malkin, Anton and Hallerberg, Mark and Markgraf, Jonas and Zettelmeyer, Jeromin and Knight, Malcolm D. and Davies, Howard and Zhivitskaya, Maria and V{\´e}ron, Nicolas and Buchheit, Lee C. and Gulati, G. Mitu and Haley, James A.}, title = {Ten Years after the Global Financial Crisis: Lessons Learned, Opportunities Missed}, series = {Global Policy}, volume = {9}, journal = {Global Policy}, number = {S1}, editor = {Anheier, Helmut K.}, publisher = {University of Durham and John Wiley \& Sons, Ltd}, pages = {1 -- 79}, language = {en} } @article{MarkgrafRosas, author = {Markgraf, Jonas and Rosas, Guillermo}, title = {On Board with Banks: Do Banking Connections Help Politicians Win Elections?}, series = {The Journal of Politics}, journal = {The Journal of Politics}, number = {81(4)}, issn = {1357-1370}, doi = {10.1086/704435}, abstract = {Do politicians benefit electorally from connections to banks? Recent research illuminates how banks benefit from political connections, yet we do not know much about the impact of bank connections on a politician's reelection chances. We consider the German system of publicly owned local savings banks to assess whether local politicians who sit on bank boards are likelier to win reelection for their parties. Based on data from 3,214 mayoral elections and 182 savings banks between 2006 and 2015, we find that mayors with a board seat in a savings bank have higher odds of winning reelection than mayors without a board seat. We address concerns about unobserved confounders and show that the electoral benefits of board membership are concentrated among conservative mayors. We also present preliminary evidence that mayors in bank boards increase bank donations to, and prevent branch closures in, their municipalities, which helps us understand why voters reelect them.}, language = {en} } @techreport{Markgraf, type = {Working Paper}, author = {Markgraf, Jonas}, title = {Backscratching in Banks: Politically Motivated Appointments of Bank Managers}, series = {CID Research Fellow and Graduate Student}, journal = {CID Research Fellow and Graduate Student}, edition = {Working Paper No. 88}, abstract = {Do politicians strategically appoint partisan allies as bank managers? Reshuffles in political institutions are essential tools to ensure internal loyalty and to improve reelection chances and regime survival in democracies and authoritarian states; however, appointments to non-political but electorally relevant institutions, namely banks, are not considered yet. I look at the Spanish publicly controlled banks (Cajas) to assess whether political factors affect appointment patterns of their bank managers. Using a Cox Proportional Hazards model and data from bank chairmen's and CEOs' careers in 90 banks between 1985-2010, I find that bank managers face an increased risk of being replaced right after elections and under newly elected governments. The risk is attenuated when the new government consists of a coalition (veto players) and institutional constraints limit the effect of political factors to bank chairmen only. The findings demonstrate that politicians' control goes well beyond political institutions and informs the debate of why bank chairmen might have a vested interest in helping incumbent politicians getting reelected, for instance, by increasing bank lendingbefore elections.}, language = {en} } @techreport{MarkgrafRosasLavezello, type = {Working Paper}, author = {Markgraf, Jonas and Rosas, Guillermo and Lavezello, Sebastian}, title = {Borrowing Welfare: Credit Access and Support for Redistribution}, abstract = {Previous scholarship has noted the incentives that governments face to promote private access to credit to substitute for reductions in publicly-provided welfare. While this research offers theoretical arguments and empirical evidence linking political decisions to credit growth (supply side of credit expansion), it is not obvious that voters see credit as a perfect substitute for welfare policies (demand side). We look into the demand side of credit expansion and test whether individuals with better access to credit indeed express lower demand for redistribution, which would be consistent with this view. Based on data from five waves of the European Social Survey (2002-2010) for 23 European countries, and controlling for unquestionable confounders (e.g. income), we find evidence that expanded access to credit attenuates demands for redistribution, but we also see that the size of this effect varies considerably, and is even null in some countries. We find that the effect size largely depends on both the country-year's level and structure of inequality, a set of findings that we attribute to differential incentives that middle-class individuals face. Hence, voters do not always see credit as a substitute for welfare; the economic and social context in which they live matters.}, language = {en} } @techreport{MarkgrafStowasser, type = {Working Paper}, author = {Markgraf, Jonas and Stowasser, Till}, title = {Electoral Cycles in Bank Lending Explained: The Role of Political Representation in Governing Bodies}, abstract = {Do politicians direct bank credit for their political benefit? We know that public-sector banks often increase lending in election years and that politicians benefit electorally from bank connections. The mechanisms and the conditions that facilitate politically motivated bank lending are however not yet explored. We study the case of German savings banks and use original bank-level data, including information on bank loans and politicians' "de facto" representation in banks' governing bodies for 294 savings banks in eight German states between 2006-2016 to estimate a difference-in-difference model. We find that savings banks with political chairmen, with a high share of political board members, and with a high partisan concentration in the supervisory board are particularly likely to systematically adjust lending before county elections. This effect is driven by savings banks with county-level chairpersons from the conservative party and robust to various specifications.}, language = {en} }