A New Approach to Identifying Political Connections: Evidence from the Russian Banking Sector
Аннотация
This paper introduces a new approach to identifying and operationalizing the business political connections of banks. We manually collect data on 2,598 bankers who owned or worked in 115 Russian banks from 2015 to 2021 and use this dataset to describe the types of political connections of Russian banks and to unveil their institutional patterns by applying cluster analysis. We confirm the widespread and heterogeneous nature of political connections in the Russian banking sector and provide a more detailed understanding of the degree of penetration of political interests into the activities of banks. We propose and explore a set of variables catching the origins, relevance, and maturity of political connections which produce additional variation among banks and could be used to facilitate a better and more theoretically grounded assessment of the effects of political connections on the business choices and the financial performance of banks.
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Литература
Abdelsalam, O., Mollah, S., & Tortosa-Ausina, E. (2017). Political connection and bank in(efficiency). Available at SSRN 2933403.
Berkowitz, D., Hoekstra, M., & Schoors, K. (2014). Bank privatization, finance, and growth. Journal of Development Economics, 110, 93-106.
Bertrand, M., Kramarz, F., Schoar, A., & Thesmar, D. (2018). The cost of political connections. Review of Finance, 22(3), 849-876.
Bian, W., Ji, Y., & Wang, P. (2021). Political connections and banks' credit smoothing behavior: Incentives and costs. Pacific-Basin Finance Journal, 68, 101606.
Blau, B. M., Brough, T. J., & Thomas, D. W. (2013). Corporate lobbying, political connections, and the bailout of banks. Journal of Banking & Finance, 37(8), 3007-3017.
Boateng, A., Liu, Y., & Brahma, S. (2019). Politically connected boards, ownership structure and credit risk: Evidence from Chinese commercial banks. Research in International Business and Finance, 47, 162-173.
Carney, R. W., Child, T. B., & Li, X. (2020). Board connections and crisis performance: Family, state, and political networks. Journal of Corporate Finance, 64, 101630.
Carretta, A., Farina, V., Gon, A., & Parisi, A. (2012). Politicians ‘on board’: do political connections affect banking activities in Italy? European Management Review, 9(2), 75-83.
Chavaz, M., & Rose, A. K. (2019). Political borders and bank lending in post-crisis America. Review of Finance, 23(5), 935-959.
Chu, Y., & Zhang, T. (2022). Political influence and banks: Evidence from mortgage lending. Journal of Financial Intermediation, 52, 100982.
Correia, M. M. (2014). Political connections and SEC enforcement. Journal of accounting and Economics, 57(2-3), 241-262.
Dafe, F., Hager, S. B., Naqvi, N., & Wansleben, L. (2022). Introduction: The structural power of finance meets financialization. Politics & Society, 50(4), 523-542.
Disli, M., Schoors, K., & Meir, J. (2013). Political connections and depositor discipline. Journal of Financial Stability, 9(4), 804-819.
Faccio, M. (2006). Politically connected firms. American economic review, 96(1), 369-386.
Fairfield, T. (2015). Structural power in comparative political economy: perspectives from policy formulation in Latin America. Business and Politics, 17(3), 411-441.
Fan, J. P., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms. Journal of financial economics, 84(2), 330-357.
Farag, H., & Dickinson, D. (2020). The power of Connections: Evidence from financial companies. Journal of Corporate Finance, 64, 101643.
Fisman, R. (2001). Estimating the value of political connections. American economic review, 91(4), 1095-1102.
Fungáčová, Z., Schoors, K., Solanko, L., & Weill, L. (2023). Staying on top: Political cycles in private bank lending. Journal of Comparative Economics, 51(3), 899-917.
García-Gómez, C. D., Zavertiaeva, M. A., Kirpishchikov, D., & López-Iturriaga, F. J. (2023). Board social capital in an emerging market: Do directors’ connections affect corporate risk-taking? Borsa Istanbul Review, 23(5), 1173-1190.
Gel’man, V. (2016). The vicious circle of post-Soviet neopatrimonialism in Russia. Post-Soviet Affairs, 32(5), 455-473.
Ghosh, S. (2023). Political connections and bank behaviour. Economic Notes, 52(1), e12209.
Goldman, E., Rocholl, J., & So, J. (2009). Do politically connected boards affect firm value? The review of financial studies, 22(6), 2331-2360.
Halford, J. T., & Li, C. (2020). Political connections and debt restructurings. Journal of Corporate Finance, 65, 101497.
Hasan, I., Jackowicz, K., Kowalewski, O., & Kozłowski, Ł. (2017). Politically connected firms in Poland and their access to bank financing. Communist and Post-Communist Studies, 50(4), 245-261.
Hillman, A. J. (2005). Politicians on the board of directors: Do connections affect the bottom line? Journal of management, 31(3), 464-481.
Hillman, A. J., & Hitt, M. A. (1999). Corporate political strategy formulation: A model of approach, participation, and strategy decisions. Academy of management review, 24(4), 825-842.
Houston, J. F., Jiang, L., Lin, C., & Ma, Y. (2014). Political connections and the cost of bank loans. Journal of Accounting Research, 52(1), 193-243.
Hung, C. H. D., Jiang, Y., Liu, F. H., Tu, H., & Wang, S. (2017). Bank political connections and performance in China. Journal of Financial Stability, 32, 57-69.
Hwang, B. H., & Kim, S. (2009). It pays to have friends. Journal of financial economics, 93(1), 138-158.
Kern, A., & Amri, P. (2021). Political credit cycles. Economics & Politics, 33(1), 76-108.
Ledeneva, A. V. (2006). How Russia really works: The informal practices that shaped post-Soviet politics and business. Cornell University Press.
Lepers, E. (2023). Surfing the credit wave: Government popularity as driver of credit cycles. European Journal of Political Economy, 102456.
Marques, I. (2017). Political Connections and Non-Traditional Investment: Evidence from Public-Private Partnerships in Vocational Education. Higher School of Economics Research Paper, WP BRP, 56.
Okhmatovskiy, I. (2010). Performance implications of ties to the government and SOEs: A political embeddedness perspective. Journal of management studies, 47(6), 1020-1047.
Papadimitri, P., Pasiouras, F. (2022). Political Connections and Banking Industry Performance: A Cross-country Analysis. Review of Corporate Finance, Forthcoming.
Preuss, S., & Königsgruber, R. (2021). How do corporate political connections influence financial reporting? A synthesis of the literature. Journal of Accounting and Public Policy, 40(1), 106802.
Sapienza, P. (2004). The effects of government ownership on bank lending. Journal of financial economics, 72(2), 357-384.
Sharafutdinova, G. (2010). Political consequences of crony capitalism inside Russia. University of Notre Dame Press.
Su, Z., & Fung, H.-G. (2013). Political Connections and Firm Performance in Chinese Companies. Pacific Economic Review, 18(3), 283–317.
Szakonyi, D. (2018). Businesspeople in elected office: Identifying private benefits from firm-level returns. American Political Science Review, 112(2), 322-338.
Tihanyi, L., Aguilera, R. V., Heugens, P., Van Essen, M., Sauerwald, S., Duran, P., & Turturea, R. (2019). State ownership and political connections. Journal of Management, 45(6), 2293-2321.
Trifonov, D. (2018). Political affiliation in corporate governance: International studies review and their implications for the Russian corporate environment (in Russian). Vestnik moscovskogo universiteta. Seria 6. Economica, 2, 118-148.
Trifonov, D. (2021). Political connections of Russian corporations: Blessing or curse? Journal of Behavioral and Experimental Finance, 29, 100458.
Vernikov, A. (2014). "National Champions" in Russia's Banking Services Market. Problems of Economic transition, 57(4), 3-25.
Wang, L., Menkhoff, L., Schröder, M., & Xu, X. (2019). Politicians’ promotion incentives and bank risk exposure in China. Journal of Banking & Finance, 99, 63-94.
Ward Jr, J. H. (1963). Hierarchical grouping to optimize an objective function. Journal of the American statistical association, 58(301), 236-244.
Berkowitz, D., Hoekstra, M., & Schoors, K. (2014). Bank privatization, finance, and growth. Journal of Development Economics, 110, 93-106.
Bertrand, M., Kramarz, F., Schoar, A., & Thesmar, D. (2018). The cost of political connections. Review of Finance, 22(3), 849-876.
Bian, W., Ji, Y., & Wang, P. (2021). Political connections and banks' credit smoothing behavior: Incentives and costs. Pacific-Basin Finance Journal, 68, 101606.
Blau, B. M., Brough, T. J., & Thomas, D. W. (2013). Corporate lobbying, political connections, and the bailout of banks. Journal of Banking & Finance, 37(8), 3007-3017.
Boateng, A., Liu, Y., & Brahma, S. (2019). Politically connected boards, ownership structure and credit risk: Evidence from Chinese commercial banks. Research in International Business and Finance, 47, 162-173.
Carney, R. W., Child, T. B., & Li, X. (2020). Board connections and crisis performance: Family, state, and political networks. Journal of Corporate Finance, 64, 101630.
Carretta, A., Farina, V., Gon, A., & Parisi, A. (2012). Politicians ‘on board’: do political connections affect banking activities in Italy? European Management Review, 9(2), 75-83.
Chavaz, M., & Rose, A. K. (2019). Political borders and bank lending in post-crisis America. Review of Finance, 23(5), 935-959.
Chu, Y., & Zhang, T. (2022). Political influence and banks: Evidence from mortgage lending. Journal of Financial Intermediation, 52, 100982.
Correia, M. M. (2014). Political connections and SEC enforcement. Journal of accounting and Economics, 57(2-3), 241-262.
Dafe, F., Hager, S. B., Naqvi, N., & Wansleben, L. (2022). Introduction: The structural power of finance meets financialization. Politics & Society, 50(4), 523-542.
Disli, M., Schoors, K., & Meir, J. (2013). Political connections and depositor discipline. Journal of Financial Stability, 9(4), 804-819.
Faccio, M. (2006). Politically connected firms. American economic review, 96(1), 369-386.
Fairfield, T. (2015). Structural power in comparative political economy: perspectives from policy formulation in Latin America. Business and Politics, 17(3), 411-441.
Fan, J. P., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms. Journal of financial economics, 84(2), 330-357.
Farag, H., & Dickinson, D. (2020). The power of Connections: Evidence from financial companies. Journal of Corporate Finance, 64, 101643.
Fisman, R. (2001). Estimating the value of political connections. American economic review, 91(4), 1095-1102.
Fungáčová, Z., Schoors, K., Solanko, L., & Weill, L. (2023). Staying on top: Political cycles in private bank lending. Journal of Comparative Economics, 51(3), 899-917.
García-Gómez, C. D., Zavertiaeva, M. A., Kirpishchikov, D., & López-Iturriaga, F. J. (2023). Board social capital in an emerging market: Do directors’ connections affect corporate risk-taking? Borsa Istanbul Review, 23(5), 1173-1190.
Gel’man, V. (2016). The vicious circle of post-Soviet neopatrimonialism in Russia. Post-Soviet Affairs, 32(5), 455-473.
Ghosh, S. (2023). Political connections and bank behaviour. Economic Notes, 52(1), e12209.
Goldman, E., Rocholl, J., & So, J. (2009). Do politically connected boards affect firm value? The review of financial studies, 22(6), 2331-2360.
Halford, J. T., & Li, C. (2020). Political connections and debt restructurings. Journal of Corporate Finance, 65, 101497.
Hasan, I., Jackowicz, K., Kowalewski, O., & Kozłowski, Ł. (2017). Politically connected firms in Poland and their access to bank financing. Communist and Post-Communist Studies, 50(4), 245-261.
Hillman, A. J. (2005). Politicians on the board of directors: Do connections affect the bottom line? Journal of management, 31(3), 464-481.
Hillman, A. J., & Hitt, M. A. (1999). Corporate political strategy formulation: A model of approach, participation, and strategy decisions. Academy of management review, 24(4), 825-842.
Houston, J. F., Jiang, L., Lin, C., & Ma, Y. (2014). Political connections and the cost of bank loans. Journal of Accounting Research, 52(1), 193-243.
Hung, C. H. D., Jiang, Y., Liu, F. H., Tu, H., & Wang, S. (2017). Bank political connections and performance in China. Journal of Financial Stability, 32, 57-69.
Hwang, B. H., & Kim, S. (2009). It pays to have friends. Journal of financial economics, 93(1), 138-158.
Kern, A., & Amri, P. (2021). Political credit cycles. Economics & Politics, 33(1), 76-108.
Ledeneva, A. V. (2006). How Russia really works: The informal practices that shaped post-Soviet politics and business. Cornell University Press.
Lepers, E. (2023). Surfing the credit wave: Government popularity as driver of credit cycles. European Journal of Political Economy, 102456.
Marques, I. (2017). Political Connections and Non-Traditional Investment: Evidence from Public-Private Partnerships in Vocational Education. Higher School of Economics Research Paper, WP BRP, 56.
Okhmatovskiy, I. (2010). Performance implications of ties to the government and SOEs: A political embeddedness perspective. Journal of management studies, 47(6), 1020-1047.
Papadimitri, P., Pasiouras, F. (2022). Political Connections and Banking Industry Performance: A Cross-country Analysis. Review of Corporate Finance, Forthcoming.
Preuss, S., & Königsgruber, R. (2021). How do corporate political connections influence financial reporting? A synthesis of the literature. Journal of Accounting and Public Policy, 40(1), 106802.
Sapienza, P. (2004). The effects of government ownership on bank lending. Journal of financial economics, 72(2), 357-384.
Sharafutdinova, G. (2010). Political consequences of crony capitalism inside Russia. University of Notre Dame Press.
Su, Z., & Fung, H.-G. (2013). Political Connections and Firm Performance in Chinese Companies. Pacific Economic Review, 18(3), 283–317.
Szakonyi, D. (2018). Businesspeople in elected office: Identifying private benefits from firm-level returns. American Political Science Review, 112(2), 322-338.
Tihanyi, L., Aguilera, R. V., Heugens, P., Van Essen, M., Sauerwald, S., Duran, P., & Turturea, R. (2019). State ownership and political connections. Journal of Management, 45(6), 2293-2321.
Trifonov, D. (2018). Political affiliation in corporate governance: International studies review and their implications for the Russian corporate environment (in Russian). Vestnik moscovskogo universiteta. Seria 6. Economica, 2, 118-148.
Trifonov, D. (2021). Political connections of Russian corporations: Blessing or curse? Journal of Behavioral and Experimental Finance, 29, 100458.
Vernikov, A. (2014). "National Champions" in Russia's Banking Services Market. Problems of Economic transition, 57(4), 3-25.
Wang, L., Menkhoff, L., Schröder, M., & Xu, X. (2019). Politicians’ promotion incentives and bank risk exposure in China. Journal of Banking & Finance, 99, 63-94.
Ward Jr, J. H. (1963). Hierarchical grouping to optimize an objective function. Journal of the American statistical association, 58(301), 236-244.
Опубликован
2025-04-17
Как цитировать
KozlovN., & SemenovaM. (2025). A New Approach to Identifying Political Connections: Evidence from the Russian Banking Sector. Препринты НИУ ВШЭ, 1(1). извлечено от https://preprint.hse.ru/article/view/26711
Раздел
Financial Economics
