01292nas a2200133   4500008004100000245006900041210006400110300001200174490000700186520084300193100001901036700002101055856008201076       2012                        eng d00aThe Politician and His Banker-How to Efficiently Grant State Aid0 aPolitician and His BankerHow to Efficiently Grant State Aid  a218-2250 v963 a<p>Should the European Union grant state aid through an institution like the European Investment bank? This paper evaluates the efficiency of different measures for granting state aid. We use a theoretical model with firms that differ in their creditworthiness and compare different types of subsidies with indirect subsidization through public banks. We find that, in a large parameter range, the politician prefers public banks to direct subsidies because they avoid windfall gains to entrepreneurs and they economize on screening costs. For similar reasons, they may increase social welfare relative to subsidies. One important prerequisite for this result is that public banks must not be allowed to fully compete with private banks. However, from a welfare perspective, a politician uses public banks inefficiently often.&nbsp;</p>
1 aHainz, Christa1 aHakenes, Hendrik  uhttps://dev7.lt.org/politician-and-his-banker-how-efficiently-grant-state-aid