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The Personal Wealth Interests of Politicians and the Stabilization of Financial Markets

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We examine whether personal wealth interests affect politicians’ decisions about stabilizing financial markets.

We use the setting of the government’s support of financial institutions under the 2008 Emergency Economic Stabilization Act. We find that the personal wealth interests of politicians are positively associated with voting in favor of the EESA. We implement several analyses to show that personal wealth interests rather than unobservable beliefs in the financial sector explain our result.

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