Once Bitten, Twice Shy: Experiences of a Banking Crisis and Expectations of Future Crises

30 Pages Posted: 17 Oct 2009

See all articles by Shannon B. Mudd

Shannon B. Mudd

Ursinus College

Neven T. Valev

Georgia State University - Department of Economics

Date Written: September 16, 2009

Abstract

Survey data from Bulgaria show that people who had experienced a loss during a banking crisis are significantly more likely to expect a new crisis. This result holds despite 12 years between the earlier crisis and the survey, and the dramatically improved performance of the financial sector and the economy in the meantime. However, we find that earlier experiences affect expectations only for less informed individuals. Individuals who are more informed about the economy are unaffected by their prior experiences.

Keywords: banking crisis, trust, expectations, Bulgaria

JEL Classification: G2, D8

Suggested Citation

Mudd, Shannon B. and Valev, Neven T., Once Bitten, Twice Shy: Experiences of a Banking Crisis and Expectations of Future Crises (September 16, 2009). William Davidson Institute Working Paper No. 969, Available at SSRN: https://ssrn.com/abstract=1490072 or http://dx.doi.org/10.2139/ssrn.1490072

Shannon B. Mudd (Contact Author)

Ursinus College ( email )

Collegeville, PA 19426-2562
United States

Neven T. Valev

Georgia State University - Department of Economics ( email )

Andrew Young School of Policy Studies
University Plaza
Atlanta, GA 30303
United States
404-651-0418 (Phone)
404-651-4985 (Fax)

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