Do Credit Rating Agencies Influence Elections?

Igor Cunha, Miguel A. Ferreira, Rui C. Silva

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


We show that credit rating agencies can influence political elections. We find that incumbent political parties experience an increase in their vote shares following municipal bond upgrades. The evidence is consistent with rating agencies affecting elections indirectly by expanding local governments' debt capacity and directly through an impact on voters' perceptions of the quality of incumbent politicians. To identify these effects, we examine election outcomes within neighboring counties by exploiting exogenous variation in municipal bond ratings due to Moody's recalibration of its scale in 2010.

Original languageEnglish
Pages (from-to)937-969
Number of pages33
JournalReview of Finance
Issue number4
StatePublished - Jul 1 2022

Bibliographical note

Publisher Copyright:
© 2022 The Author(s). Published by Oxford University Press on behalf of the European Finance Association. All rights reserved.


  • Credit ratings
  • Economic conditions
  • Elections
  • Financial constraints
  • Government spending
  • Municipal bonds

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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