Politicians promotion incentives and bank risk exposure in China


Wang, Li ; Menkhoff, Lukas ; Schröder, Michael ; Xu, Xian


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URL: https://ub-madoc.bib.uni-mannheim.de/38913
URN: urn:nbn:de:bsz:180-madoc-389138
Document Type: Working paper
Year of publication: 2015
The title of a journal, publication series: ZEW Discussion Papers
Volume: 15-026
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: G21 , G23 , H74,
Keywords (English): Bank lending , bank risk exposure , local politicians , promotion incentives
Abstract: This paper shows that politicians’ pressure to climb the career ladder increases bank risk exposure in their region. Chinese local politicians are set growth targets in their region that are relative to each other. Growth is stimulated by debt-financed programs which are mainly financed via bank loans. The stronger the performance incentive the riskier the respective local bank exposure becomes. This effect holds primarily for local banks which are under a certain degree of control of local politicians and it has increased with the release of recent stimulus packages requiring local co-financing.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Wang, Li ; Menkhoff, Lukas ; Schröder, Michael ; Xu, Xian (2015) Politicians promotion incentives and bank risk exposure in China. Open Access ZEW Discussion Papers Mannheim 15-026 [Working paper]
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