Everybody Hurts: Banking Crises and Individual Wellbeing

Alberto Montagnoli () and Mirko Moro

No 2014010, Working Papers from The University of Sheffield, Department of Economics

Abstract: We investigate whether banking crises affect individuals' subjective wellbeing (SWB) in eighteen European countries between 1980-2011. We address the potential endogeneity between banking crises and SWB by exploiting spatial and temporal differences in banking crises episodes. We find negative, robust, pronounced and highly persistent effects for events prior to 2007. The 2007-2008 crash lowered SWB in countries that had previously experienced a credit boom. Individuals living in regions hosting financial centres suffer bigger losses. Yet, the impact is similar across socio-demographic groups. These effects extend beyond changes in macroeconomic factors, wealth and fiscal policies: they are hidden psychological costs.

Keywords: well-being; happiness; financial crises; banking crises; difference-in-differences; uncertainty (search for similar items in EconPapers)
JEL-codes: D1 E44 G21 H0 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-05
New Economics Papers: this item is included in nep-ban, nep-eur, nep-hap and nep-mac
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2014010

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