Banking on Politics
This paper presents new data from 150 countries showing that former cabinet members, central bank governors, and financial regulators are many orders of magnitude more likely than other citizens to become board members of banks. Countries where the...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090415165247 http://hdl.handle.net/10986/4096 |
| Summary: | This paper presents new data from 150
countries showing that former cabinet members, central bank
governors, and financial regulators are many orders of
magnitude more likely than other citizens to become board
members of banks. Countries where the politician-banker
phenomenon is more prevalent have higher corruption and more
powerful yet less accountable governments, but not better
functioning financial systems. Regulation becomes more
pro-banker where this happens more often. Furthermore, a
higher fraction of the rents that are created accrue to
bankers, former politicians are not more likely to be
directors when their side is in power, and banks are more
profitable without being more leveraged. Rather than
supporting a public interest view, the evidence is
consistent with a capture-type private interest story where,
in exchange for a non-executive position at a bank in the
future, politicians provide for beneficial regulation. |
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