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Political influences on the costs of banking crises in emerging market economies: testing the U-shaped veto player hypothesis


  • Apanard Angkinand
  • Thomas Willett


While there has been considerable research on the consequences of financial crises, there has been little empirical research on the possible effects of the role of domestic political institutions that influence a government's ability to implement crisis management policies. This paper investigates the impact of domestic institutions, characterized by a U-shaped veto player framework, on the output costs of banking crises. The analysis extends MacIntyre's qualitative study (2001) of the relationship between veto players and policy risks in the Asian financial crises. For a large sample of emerging market economies, we find support for McIntyre's hypotheses that both too few and too many veto players are associated with greater costs of banking crises.

Suggested Citation

  • Apanard Angkinand & Thomas Willett, 2008. "Political influences on the costs of banking crises in emerging market economies: testing the U-shaped veto player hypothesis," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 1(2), pages 279-297.
  • Handle: RePEc:taf:macfem:v:1:y:2008:i:2:p:279-297 DOI: 10.1080/17520840802252878

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    References listed on IDEAS

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    1. repec:eee:ecofin:v:43:y:2018:i:c:p:54-70 is not listed on IDEAS
    2. repec:ces:ifodic:v:11:y:2014:i:4:p:19105953 is not listed on IDEAS
    3. Philip Wilms & Job Swank & Jakob de Haan, 2014. "Determinants of the real impact of banking crises: A review and new evidence," DNB Working Papers 437, Netherlands Central Bank, Research Department.
    4. Ha, Eunyoung & Kang, Myung-koo, 2015. "Government Policy Responses to Financial Crises: Identifying Patterns and Policy Origins in Developing Countries," World Development, Elsevier, vol. 68(C), pages 264-281.
    5. James R. Barth & Apanard Penny Prabha & Wenling Lu, 2014. "Do Interest Groups Unduly Influence Bank Regulation?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(4), pages 19-25, 01.

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    veto player; output cost; banking crises;


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