The Use of Public Banks in Election Campaigns

This paper documents politically motivated allocation of public credit during federal elections in Brazil between 2011 and 2023. This takes place especially when the total credit in the economy contracts. In this case, public banks act counter-cyclically by increasing their credit growth rates. Public credit is targeted to politically attractive states in election cycles. Political competition and alliances drive public credit misallocation.., public banks act counter-cyclically by increasing their credit growth rates. Public credit is targeted to politically attractive states in election cycles. Political competition and alliances drive public credit misallocation.