The recent global crisis has raised a lot of interest from academics, governments, and policy institutions in the economic consequences of financial crises. However, we know far less about how financial crises affect society at large.
In a new paper, my aim is to extend our understanding of the consequences of financial crises beyond their economic
effects and provide a comprehensive analysis of their social costs.
Using data on 187 banking crises in 126 countries over the period 1970-2009, I examine the impact of a crisis not only
on GDP growth, unemployment, and the financial sector, but also on health, education, poverty, and gender issues. A wider-angle lens exposes broad-ranging implications for society. For example, in the six years following a crisis,
average life expectancy declines by nine months, primary school enrolment drops by 3.5%, and fertility falls by 5.5% (but adolescent fertility rises by 4.5%). I also find a considerable short-run worsening of poverty and income equality, and a lasting 50% increase in outbound refugees and inbound foreign aid. Although output and employment suffer at least as much for developed countries, the social costs of financial crises are much greater for less-developed
“The Social Costs of Financial Crises” - SSRN
working paper by Mathijs van Dijk, June 2013.
Available at: http://ssrn.com/abstract=2278526
Mathijs van Dijk
Professor of Finance
Rotterdam School of Management