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Impending political promotions and risk-taking: Evidence in China’s banking industry
Author(s)
Date Issued
2022
Conference
Citation
Li, X. (9 Dec 2022). Impending political promotions and risk-taking: Evidence in China’s banking industry. 2022 AIB Asia Pacific Regional Conference, Ningbo & Hong Kong, China.
Type
Conference Paper
Abstract
This study explores the impact of impending political promotions on firms’ risk-taking from the
lens of agency theory. Using a sample of China’s local commercial banks (including city and rural
commercial banks) from 2007 to 2020, I find that impending political promotions positively affect banks’
risk-taking. I further develop a multi-level framework to examine moderating effects at event and
environment levels. I find that the positive impact of impending political promotions on banks’ risktaking is weakened by the continuance of political connections and strengthened by market development.
My study opens a new avenue for exploring the role of public agents in affecting risk-taking.
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