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The political economy of the Ecuadorian financial crisis

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  • Gabriel X. Martinez

Abstract

This paper takes the unusual step of exploring economic hypotheses through interviews with key economic agents. It focuses on the causes of Ecuador's 1999 banking collapse, within an eclectic framework with Minskian elements. Broad support is found for 'endogenous' explanations of financial crises and little backing for explanations such as accidents or policy mistakes. Interviewees argued that after the stabilisation programme of 1992, agents became euphoric and accumulated debt to finance imprudent levels of expansion; that incentives for moral hazard led to financial corruption and excessive risk taking; and that weak regulation after financial liberalisation encouraged financial fragility. Copyright 2006, Oxford University Press.

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  • Gabriel X. Martinez, 2006. "The political economy of the Ecuadorian financial crisis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(4), pages 567-585, July.
    • Handle: RePEc:oup:cambje:v:30:y:2006:i:4:p:567-585
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    File URL: http://hdl.handle.net/10.1093/cje/bei097
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    Cited by:

    1. Ivan Gachet & Diego F. Grijalva & Paúl A. Ponce & Damián Rodríguez, 2019. "Vertical and Horizontal Inequality in Ecuador: The Lack of Sustainability," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(3), pages 861-900, October.
    2. Adam, Antonis & Karanatsis, Konstas, 2016. "Sovereign Defaults and Political Regime Transitions," MPRA Paper 69062, University Library of Munich, Germany.
    3. Shanti Chakravarty & Jonathan Williams, 2013. "Privatisation of Banks in Mexico and the Tequila Crisis," Working Papers 13012, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).

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