Rent-seeking in elite networks

  • We employ a unique dataset on members of an elite service club in Germany to investigate how elite networks affect the allocation of resources. Specifically, we investigate credit allocation decisions of banks to firms inside the network. Using a quasi-experimental research design, we document misallocation of bank credit inside the network, with state-owned banks engaging most actively in crony lending. The aggregate cost of credit misallocation amounts to 0.13 percent of annual GDP. Our findings, thus, resonate with existing theories of elite networks as rent extractive coalitions that stifle economic prosperity.

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Author:Rainer HaselmannGND, David Schoenherr, Vikrant Vig
Parent Title (English):SAFE working paper series ; No. 132
Series (Serial Number):SAFE working paper (132)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Date of Publication (online):2016/04/15
Date of first Publication:2016/04/14
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2016/05/10
Edition:April 14, 2016
Page Number:58
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht