Crony Capitalism and Financial System Stability

Haslag, Joseph and Pecchenino, Rowena A. (2005) Crony Capitalism and Financial System Stability. Economic Inquiry, 43 (1). pp. 24-38. ISSN 0095-2583

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Prior to the Asian financial crisis, the cozy relationships between corporations, governments, and banks were seen as a potent force for economic growth and development. In this article we examine the institution of crony capitalism. Under conditions in which the Second Welfare Theorem does not hold, there is a role for government. Some governmental institutions do encourage more risky, high-payoff entrepreneurial activities. Our aim is to examine crony capitalism as a potential source of government activity that enhances economic productivity. In addition, we explore the conditions under which the government activity can instigate a financial crisis.

Item Type: Article
Additional Information: Preprint version of original published article. The definitive version is available at (DOI: 10.1093/ei/cbi003)
Keywords: Crony Capitalism; Financial System Stability; Asian financial crisis; Second Welfare Theorem;
Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
Item ID: 2807
Identification Number: DOI: 10.1093/ei/cbi003
Depositing User: Prof. Rowena Pecchenino
Date Deposited: 26 Oct 2011 15:43
Journal or Publication Title: Economic Inquiry
Publisher: Wiley-Blackwell
Refereed: No

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