Political accountability during crises: evidence from 40 years of financial policies

Orkun Saka, Yuemei Ji and Clement Minaudier

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We show that politicians facing a binding term limit are more likely to engage in financial deliberalization than those facing reelection, but only in the wake of a financial crisis. In particular, they implement policies that tend to favor incumbent financial institutions over the general population, such as increasing barriers to entry in the banking sector. We propose a conceptual framework and several mechanisms to rationalize this behavior and show that revolving doors between the government and the financial sector play a key role in encouraging bank-friendly policies after crises.

Keywords: democracies; financial crises; political accountability; special-interest groups; term limits (search for similar items in EconPapers)
JEL-codes: E6 J1 (search for similar items in EconPapers)
Date: 2026-07-27
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Published in International Economic Review, 27, July, 2026. ISSN: 0020-6598

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