Date of Award


Degree Type


Degree Name

Master of Science (MS)


Economics and Finance


In their paper "Corporate Lobbying, Political Connections, and the Bailout of Banks," Blau, Brough, and Thomas (2012) present significant evidence that firms that engaged in lobbying and maintain political connection with the federal government were more likely to receive funds from the Troubled Asset Relief Program (TARP), received more funds on average, and received the funds earlier than those firms that did not lobby or maintain political connections. These results fit into a large body of work showing similar results showing that lobbying has positive economic benefits to lobbying firms (Chen and Yang, 2010; Cooper and Ovtchinnikov, 2010; Faccio, 2010; Facio, Masulis and McConnell, 2006; Fisman, 2001; Goldman and Rocholl, 2009; Igan, Mishra and Tressel, 2009; Langbein and Lotwis, 1990). Li (2012) also found that political connections led to increased probability of receiving TARP funds.

Less attention has been paid to the behavior of firms that lobbied after receiving government bailouts; Duchin and Sosyura (2011) do show that banks that received bailouts look less risky due to better capitalization ratios; however, bailed out banks also tend to increase risky lending and therefore show an increase in volatility and default risk. However, to our knowledge, no study has been done that attempts to isolate the difference in repayment behavior between connected and non-connected banks following a widespread bailout.

In this study, we extend the literature by studying the factors that led to repayment of TARP funds, specifically comparing those banks that did and did not maintain political connections in the years leading up to the 2008 financial crisis.


This work made publicly available electronically on December 19, 2012.

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