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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.
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.