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Identifier to cite or link to this item: https://hdl.handle.net/10086/27316

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Title
Lobbying on Regulatory Enforcement Actions: Evidence from Banking
Creator
Creator Name
Lambert, Thomas Lambert, Thomas
Affiliation
Affiliation Name
Université catholique de Louvain
Key Word
Banking supervision
enforcement actions
lobbying
moral hazard
risk taking
JEL
D72
G21
G28
Abstract
There is growing concern, but still little systematic evidence, about the incidence and drivers of lobbying efforts made by the U.S. banking industry. This paper documents the relationships between lobbying, regulatory oversight, and bank risk taking. Using a large sample of commercial and savings banks, I find that lobbying banks are less likely to be subject to a severe enforcement action, suggesting that banks engage in lobbying to gain preferential treatment. Among the lobbying dimensions studied, lobbyists with prior employment in public offices are more effective at reducing the probability of an action, especially in period of intense enforcement activity. These findings are robust to controlling for supervisory ratings and account for endogeneity concerns by employing instrumental variables strategies. I also show an increase in default and credit risk at lobbying banks. Overall, these results appear rather inconsistent with an information-based explanation of bank lobbying, but consistent with the capture theory of regulation.
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2015-06
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
HIT-REFINED Working Paper Series ; No. 28
Relation
Related Identifier
URI
  http://www.ier.hit-u.ac.jp/hit-refined/
Number of Pages
50
Sponsorship
基盤研究(S) = Grants-in-Aid for Scientific Research (S)
Appears in Collections
Working Paper Series / Real Estate Markets, Financial Crisis, and Economic Growth An Integrated Economic Approach
URL
https://hdl.handle.net/10086/27316