Rent seeking in elite networks

Rainer Haselmann, David Schoenherr, Vikrant Vig

Research output: Contribution to journalArticlepeer-review

14 Scopus citations

Abstract

We employ a unique data set on members of an elite service club in Germany to investigate how social connections in 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 bankers with weakly aligned incentives engaging most actively in crony lending. Our findings, thus, resonate with existing theories of elite networks as rent extractive coalitions that stifle economic prosperityth weakly aligned incentives engaging most actively in crony lending. Our findings, thus, resonate with existing theories of elite networks as rent extractive coalitions that stifle economic prosperity.

Original languageEnglish (US)
Pages (from-to)1638-1690
Number of pages53
JournalJournal of Political Economy
Volume126
Issue number4
DOIs
StatePublished - Aug 1 2018

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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