The political economy of the Ecuadorian financial crisis |
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Authors: | Martinez Gabriel X |
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Institution: | * Ave Maria University, Naples, FL |
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Abstract: | This paper takes the unusual step of exploring economic hypothesesthrough interviews with key economic agents. It focuses on thecauses of Ecuador's 1999 banking collapse, within an eclecticframework with Minskian elements. Broad support is found forendogenous explanations of financial crises andlittle backing for explanations such as accidents or policymistakes. Interviewees argued that after the stabilisation programmeof 1992, agents became euphoric and accumulated debt to financeimprudent levels of expansion; that incentives for moral hazardled to financial corruption and excessive risk taking; and thatweak regulation after financial liberalisation encouraged financialfragility. |
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Keywords: | Financial crises Euphoria Moral hazard Financial liberalisation Minsky |
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