Do elections delay regulatory action?

This paper investigates whether elections delay regulatory action against failing financial institutions in a country with strong institutions and property rights. Exploiting the cross-sectional and time-series heterogeneity in the exogenous electoral cycles of U.S. insurance regulators and governors, we find causal evidence that regulators delay interventions before elections. The extent of the delay is larger before competitive elections and when the regulatory task is assigned to a politician (elected regulator) rather than a bureaucrat (appointed regulator). Regulatory governance mechanisms that constrain the discretion of regulators reduce the politicization of regulatory supervision. The delays induced by elections substantially increase the ultimate costs of failure.

• Publication year

  2018

• Venue

  Journal of Financial Economics

• Publication date

  2018-11-01

• Fields of study

  Economics, Political Science

• Identifiers
  DOI 10.2139/SSRN.2331018
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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