Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104443
Authors: 
Herrera, Helios
Ordoñez, Guillermo
Trebesch, Christoph
Year of Publication: 
2014
Series/Report no.: 
Munich Discussion Paper 2014-39
Abstract: 
We show that political booms, measured by the rise in governments’ popularity, predict financial crises above and beyond other better-known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We show that governments in emerging economies are more concerned about their reputation and tend to ride the short-term popularity benefits of weak credit booms rather than implementing politically costly corrective policies that would help prevent potential crises. We provide evidence of the relevance of this reputation mechanism.
Subjects: 
Credit Booms
Reputation
Financial Crises
Political Popularity
Emerging Markets
JEL: 
D82
E44
E51
E58
G01
H12
N10
N20
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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