IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/84368.html
   My bibliography  Save this paper

Banking crises and politics: a long run perspective

Author

Listed:
  • Chwieroth, Jeffrey
  • Walter, Andrew

Abstract

Are the policy responses to the financial crises of 2007-9 and the political events that followed them exceptional? We show that over the course of nearly 150 years, severe banking crises have become increasingly consequential for policy and politics in democracies. First, governments have come much more likely over time to opt for extensive bailouts and other policies aimed at wealth protection during crises. Second, the inclination of voters to punish governments that are in office when crises occur has also increased sharply over time. We argue that the main cause of these developments is the rise of ‘great expectations’ among large segments of society in modern democracies regarding the protection of wealth in the post-1945 era, especially since the 1970s. From this time, severe banking crises returned as an important threat to this wealth, resulting in rising ‘mass pressure from below’ on governments to provide costly bailouts and with increasingly powerful political effects.

Suggested Citation

  • Chwieroth, Jeffrey & Walter, Andrew, 2017. "Banking crises and politics: a long run perspective," LSE Research Online Documents on Economics 84368, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:84368
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/84368/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Herradi, Mehdi El & Leroy, Aurélien, 2022. "The rich, poor, and middle class: Banking crises and income distribution," Journal of International Money and Finance, Elsevier, vol. 127(C).
    2. -, 2021. "Building forward better: Action to strengthen the 2030 Agenda for Sustainable Development. Fourth report on regional progress and challenges in relation to the 2030 Agenda for Sustainable Development ," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 46696 edited by Eclac.
    3. Andina-Díaz, Ascensión & Feri, Francesco & Meléndez-Jiménez, Miguel A., 2021. "Institutional flexibility, political alternation, and middle-of-the-road policies," Journal of Public Economics, Elsevier, vol. 204(C).
    4. Chwieroth, Jeffrey & Walter, Andrew, 2020. "Great expectations, financialization and bank bailouts in democracies," LSE Research Online Documents on Economics 102749, London School of Economics and Political Science, LSE Library.
    5. Mohamed Sami Ben Ali & Sami Ben Mim, 2023. "Democracy and Banking Stability: Is the Relationship U-Shaped?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4426-4448, December.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:84368. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.