Getting What You Want: Information and Crisis Management in Ireland and Korea

32 Pages Posted: 9 Nov 2012

See all articles by Christopher Gandrud

Christopher Gandrud

City University London - International Political Economy; Hertie School of Governance

Mícheál O’Keeffe

London School of Economics

Date Written: April 16, 2012

Abstract

Governments have a range of policy options for managing banking crises, but it can be difficult for them to determine and choose policies that will best further their aims. During banking crises, policymakers must rely on information from bureaucrats and actors in the financial system with different preferences. Moreover, initial crisis containment choices can constrain future resolution options. The 2008/09 banking crisis in Ireland and the following effective nationalization of the banking sector reminds us that it can be diffcult to actually choose policies that will successfully manage a crisis in a preferred direction. Our paper contrasts the Irish case with South Korea’s 1997 experience, where guarantee and ownership policy choices more closely matched decision-maker’s preferences. We build on Satyanath’s (2006) signaling approach to create a model of how decision-makers could be influenced to make nonpreferred choices. We examine the empirical plausibility of our model by comparing analytic narratives of Ireland’s and Korea’s crises. A key finding is Ireland, as a Eurozone member, did not need to rely on external actors giving more accurate information. Because of this, Irish decision-makers were unable to get what they wanted.

Suggested Citation

Gandrud, Christopher and O’Keeffe, Mícheál, Getting What You Want: Information and Crisis Management in Ireland and Korea (April 16, 2012). Available at SSRN: https://ssrn.com/abstract=2173021 or http://dx.doi.org/10.2139/ssrn.2173021

Christopher Gandrud (Contact Author)

City University London - International Political Economy ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

Hertie School of Governance ( email )

Schlossplatz 1
Berlin, 10178
Germany

Mícheál O’Keeffe

London School of Economics ( email )

Northampton NN7 1NE
United Kingdom

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