The Social Costs of Financial Crises

27 Pages Posted: 13 Jun 2013

See all articles by Mathijs A. Van Dijk

Mathijs A. Van Dijk

Erasmus University - Rotterdam School of Management; Erasmus Research Institute of Management (ERIM)

Date Written: June 12, 2013

Abstract

This paper studies the impact of financial crises on society. Using data on 187 banking crises in 126 countries over the period 1970-2009, I examine the impact of a crisis not only on the economy and the financial sector, but also on health, education, poverty, and gender issues. A wider-angle lens exposes broad-ranging implications for society. For example, in the six years following a crisis, average life expectancy declines by nine months, primary school enrolment drops by 3.5%, and fertility falls by 5.5% (but adolescent fertility rises by 4.5%). I also find a considerable short-run worsening of poverty and income equality, and a lasting 50% increase in outbound refugees and inbound foreign aid. Although output and employment suffer at least as much for developed countries, the social costs of financial crises are much greater for less-developed countries.

Keywords: financial crises, social costs, health, education, poverty, ender issues

JEL Classification: E32, E44, F3, N20, I1, I2, I3

Suggested Citation

Van Dijk, Mathijs A., The Social Costs of Financial Crises (June 12, 2013). Available at SSRN: https://ssrn.com/abstract=2278526 or http://dx.doi.org/10.2139/ssrn.2278526

Mathijs A. Van Dijk (Contact Author)

Erasmus University - Rotterdam School of Management ( email )

P.O. Box 1738
Rotterdam, 3000 DR
Netherlands
+31 10 408 1124 (Phone)
+31 10 408 9017 (Fax)

HOME PAGE: http://mathijsavandijk.com/

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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