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Emilie SARTRE (CREST) “Toxic Loans and The Entry of Extreme Candidates”

March 2, 12:15 pm - 1:30 pm

Time: 12:15pm – 13:30 pm
Date: 02th of March 2020
Place: Room 3001

Emilie SARTRE (CREST) “Toxic Loans and The Entry of Extreme Candidates”

Abstract : While the importance of the 2008 financial crisis in boosting extreme and populist voting in Europe and in the USA is well acknowledged, the role played by public finance mismanagement has been so far neglected. In this paper, we study the electoral consequences of a public finance scandal: the leak on September 2011 of a list of French municipalities which contracted “toxic” loans to the bank Dexia. Using an instrumental variable strategy based on geographical distance to remove endogeneity issues, we find that during the subsequent local elections in 2014, municipalities with toxic loans had a higher electoral competition and a higher probability of having extreme candidacies. Looking at French newspapers, the financial scandal was mainly debated by the left and the extreme-left opposition. Yet the strategy of the extreme right seems different and perhaps more successful. As the FN political party is well structured, far-right candidates increase relatively more their campaign efforts in municipalities with toxic loans, by obtaining a higher media coverage in these municipalities – without necessarily talking about the scandal. On the contrary, the incumbent tends to be less present in these municipalities, leaving the door open for other candidates.  In terms of vote share, these different electoral strategies have led to a decrease in vote share for the incumbent’s political party and an increase in vote share for the extreme right.

Joint work with Paul Vertier (LIEPP) and Gianmarco Daniele (Bocconi University)


March 2
12:15 pm - 1:30 pm
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Edouard CHALLE
Julien PRAT