To What Extent Do Political Considerations Affect Finance?

In June, the Stigler Center brought together top academics for a conference on the impact of politics on finance. Ahead of our second annual Political Economy of Finance conference, we are seeking papers related to the interaction between politics and business.

 

 

Until 25 years ago, researchers in finance were not very interested in political economy, and political economists were not very interested in finance. In the last two and a half decades, political considerations have begun to play an increasingly important role in financial research: from the design of the rules that make financial markets viable to politically-motivated changes in bankruptcy law, from the political connections of firms to the effects of political uncertainty on investments. In spite of the large number of researchers interested in this area, there had not been a regular conference dedicated to this topic.   

 

The Stigler Center is a natural place to host such a conference. For this reason, last June, the Stigler Center launched the first conference entirely dedicated to the interaction between political economy and finance. Titled “The Political Economy of Finance,” the conference assembled top scholars and academics from around the world and featured a number of innovative papers that explored various themes related to the connection between finance and politics, particularly the effect that political engagement by corporations has on the changing nature of the rules of the game, and the importance of taking political influence into account when studying financial markets.

 

Organized by Mara Faccio, one of the most active and well-cited scholars in this area, the conference was a great success. The conference’s most widely discussed paper, by Jeffrey Brown and Jiekun Huang of the University of Illinois at Urbana-Champaign, examined the value of firms’ political access by looking into the records of 2,286 meetings held between corporate CEOs and officials within the Obama White House. Firms that had access to the Obama White House, they found, enjoyed several benefits, from government contracts and regulatory relief to an average stock price increase of 1 percent in the two months following the meetings.

 

It is our intention to make the Political Economy of Finance conference an annual event. Ahead of next years’ gathering, which will take place in May 2018, the Stigler Center is currently opening the call for papers. We seek high quality papers that study the interactions between political economy and finance. With this initiative, we hope to provide a forum for the best research on this topic to be presented and discussed in front of the best scholars interested in this topic. If you are not planning to submit a paper, but would like to be invited, please send your request ASAP; places are limited and will be assigned on the basis of academic credential and order of request. We hope to see you all.   

 

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy. 

 

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