Using disaggregated data on Indian state-owned banks, we study how political connections influence their lending behaviour. The findings indicate an overall credit expansion of 10% during election years for banks with political connections, driven by increased lending to agriculture and Small and Medium Enterprises. Further disaggregation reveals cycles in such lending driven by electoral considerations, primarily for banks with political connections. In turn, there is a gradual weakening in the asset quality of these banks. The net effect is manifest in lower productivity. The key policy implication is that electoral manipulation exerts significant economic costs.

中文翻译：

---

政治关系和银行行为

我们使用印度国有银行的分类数据，研究政治关系如何影响它们的借贷行为。调查结果表明，在对农业和中小企业的贷款增加的推动下，具有政治关系的银行在选举年的整体信贷扩张了 10%。进一步的分解揭示了受选举因素驱动的此类贷款的周期，主要是针对具有政治关系的银行。反过来，这些银行的资产质量也在逐渐减弱。净效应表现为较低的生产率。关键的政策含义是选举操纵会产生巨大的经济成本。