Financial Crisis, Creditor-Debtor Conflict, and Populism

67 Pages Posted: 10 Jan 2019 Last revised: 18 Feb 2020

See all articles by Gyozo Gyongyosi

Gyozo Gyongyosi

Kiel Institute for the World Economy

Emil Verner

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: April 1, 2019

Abstract

We study the impact of debtor distress during a financial crisis on support for a populist far-right party. Our empirical approach exploits variation in exposure to foreign currency household loans during a currency crisis in Hungary. Foreign currency debt exposure leads to a large and persistent increase in the far-right vote share. We present evidence that conflict between creditors and debtors over the resolution of the crisis is an important mechanism in the electoral success of the populist far right. Our results shed light on why financial crises are often followed by increased support for populist parties.

Keywords: populism, far-right parties, political extremism, financial crisis, household debt, foreign currency debt

JEL Classification: D10, D72, E44, F34, G01

Suggested Citation

Gyongyosi, Gyozo and Verner, Emil, Financial Crisis, Creditor-Debtor Conflict, and Populism (April 1, 2019). Available at SSRN: https://ssrn.com/abstract=3289741 or http://dx.doi.org/10.2139/ssrn.3289741

Gyozo Gyongyosi

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

Emil Verner (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
334
Abstract Views
1,907
rank
98,290
PlumX Metrics