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Good governance problems and recent financial crises in some EU countries

Author

Listed:
  • Gamberger, Dragan
  • Smuc, Tomislav

Abstract

The starting point for the research has been the list of 147 banking crises within the period 1976-2011 prepared by the International Monetary Fund. The countries with crises have been analysed with respect to publicly available World Bank indicators in the periods of three years before the crises. The machine learning methodology for subgroup discovery has been used for the analysis. It enabled identification of five subsets of crises. Two of them have been identified as especially useful for the characterization of EU countries with banking crises in the year 2008. Fast growing credit activity is characteristic for the first subgroup while socioeconomic problems recognized by non-increasing quality of public health are decisive for the second subgroup. Comparative analysis of EU countries included into these subgroups demonstrated statistically significant differences with respect to World Bank good governance indicator values for the period before the crisis. Control of corruption, rule of law, and government effectiveness are the indicators which are statistically different for these sets of countries. The significance of the result is in the segmentation of the corpus of countries with banking crises and the recognition of connections between banking crises, socioeconomic problems, and governance effectiveness in some EU countries.

Suggested Citation

  • Gamberger, Dragan & Smuc, Tomislav, 2013. "Good governance problems and recent financial crises in some EU countries," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-20.
  • Handle: RePEc:zbw:ifweej:201341
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    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2013-41
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    File URL: https://www.econstor.eu/bitstream/10419/87694/1/771339542.pdf
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    References listed on IDEAS

    as
    1. Gianni De Nicolò & Marcella Lucchetta, 2011. "Systemic Risks and the Macroeconomy," NBER Chapters,in: Quantifying Systemic Risk, pages 113-148 National Bureau of Economic Research, Inc.
    2. Michael Francis, 2004. "Governance And Financial Fragility," Economic Papers, The Economic Society of Australia, vol. 23(4), pages 386-395, December.
    3. Laura Langbein & Stephen Knack, 2010. "The Worldwide Governance Indicators: Six, One, or None?," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 350-370.
    4. Charles Oman & Christiane Arndt, 2006. "Governance Indicators for Development," OECD Development Centre Policy Insights 33, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Banking crises; World Bank indicators; subgroup discovery; good governance; corruption;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J00 - Labor and Demographic Economics - - General - - - General

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