Rent Seeking in Elite Networks

Haselmann, R, Schoenherr, D and Vig, V (2018) Rent Seeking in Elite Networks. Journal of Political Economy, 126 (4). pp. 1638-1690. ISSN 0022-3808 OPEN ACCESS


We employ a unique dataset 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.

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Item Type: Article
Subject Areas: Finance
Additional Information:

Vikrant Vig gratefully acknowledges financial support from the European Research Council (ERC) under the European Union's Horizon 2020 research and innovation programme (grant agreement No. 679747).

© 2018 University of Chicago

Funder Name: LOEWE Zentrum AdRIA, European Research Council
Date Deposited: 24 May 2018 14:37
Date of first compliant deposit: 24 May 2018
Subjects: Credit management
Social classes
Resource allocation
Last Modified: 21 Jul 2024 01:32

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