Fixing market failures or fixing elections?
Subtitle: agricultural credit in India
By: Shawn A. Cole
Contributors: Harvard Business School
Series: Working paper / Harvard Business School -- 09-001; Working paper (Harvard Business School) -- 09-001
Publisher: Harvard Business School
Published: 2008
Place of publication: Boston
Language: eng
Number of pages: 50
Description: This paper integrates theories of political budget cycles with theories of tactical electoral redistribution to test for political capture in a novel way. Studying banks in India, I find that government-owned bank lending tracks the electoral cycle, with agricultural credit increasing by 5-10 percentage points in an election year. There is significant cross-sectional targeting, with large increases in districts in which the election is particularly close. This targeting does not occur in non-election years, or in private bank lending. I show capture is costly: elections affect loan repayment, and election year credit booms do not measurably affect agricultural output.
Notes: "July 2008"--Publisher's web site.

Includes bibliographical references.