Journal of Political Economy Vol. 126 No. 4 2018
Rent Seeking in Elite Networks
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 prosperity.
- DOI
- 10.1086/697742
- Volume
- 126
- Issue
- 4
- Pages
- 1638-1690
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref