Time: 1.00 - 2.00pm
Speaker: Orkun Saka (University of Sussex)
Seminar Title: Financial Policymaking after Crises: Public vs. Private Interests 

Abstract: Very few papers in the literature have focused on what drives actual government policies after financial crises. We first present a simple model of post-crisis policymaking driven by both public and private interests. Using the most comprehensive dataset available on de-facto financial liberalization across 94 countries between 1973 and 2015, we show that financial crises can trigger policy reversals, i.e. they can lead to more government intervention and a process of re-regulation of financial markets. We also find that post-crisis interventions are common only in democratic countries suggesting a demand channel from public to policymakers. However, by using a plausibly exogenous political setting muting policymakers' accountability, we document that democratic leaders who do not have re-election concerns are substantially more likely to intervene in financial markets after crises (but not before), implying that strong private interests are also at play. These interventions due to private interests are reflected especially in controversial policy areas such as interest rate controls or bank entry barriers and not in areas such as banking supervision or capital controls that are usually considered as more aligned with public interest. 
This event is by invitation only.