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Political accountability during crises: evidence from 40 years of financial policies

Author

Listed:
  • Saka, Orkun
  • Ji, Yuemei
  • Minaudier, Clement

Abstract

We show that politicians facing a binding term limit are more likely to engage in financial deliberalization than those facing reelection, but only in the wake of a financial crisis. In particular, they implement policies that tend to favor incumbent financial institutions over the general population, such as increasing barriers to entry in the banking sector. We propose a conceptual framework and several mechanisms to rationalize this behavior and show that revolving doors between the government and the financial sector play a key role in encouraging bank-friendly policies after crises.

Suggested Citation

  • Saka, Orkun & Ji, Yuemei & Minaudier, Clement, 2026. "Political accountability during crises: evidence from 40 years of financial policies," LSE Research Online Documents on Economics 140385, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:140385
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    File URL: https://researchonline.lse.ac.uk/id/eprint/140385/
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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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