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Banks and the political economy of the sovereign debt crisis in Italy and Spain

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  • Lucia Quaglia
  • Sebasti�n Royo

Abstract

This paper sets out to explain why Spain experienced a full-fledged sovereign debt crisis and had to resort to euroarea financial assistance for its banks, whereas Italy did not. It undertakes a structured comparison, dissecting the sovereign debt crisis into a banking crisis and a balance of payments crisis. It argues that the distinctive features of bank business models and of national banking systems in Italy and Spain have considerable analytical leverage in explaining the different scenarios of the crises in each country. This 'bank-based' analysis contributes to the flourishing literature that examines changes in banking with a view to account for the differentiated impact of the global banking crisis first and the sovereign debt crisis in the euroarea later.

Suggested Citation

  • Lucia Quaglia & Sebasti�n Royo, 2015. "Banks and the political economy of the sovereign debt crisis in Italy and Spain," Review of International Political Economy, Taylor & Francis Journals, vol. 22(3), pages 485-507, June.
    • Handle: RePEc:taf:rripxx:v:22:y:2015:i:3:p:485-507
    DOI: 10.1080/09692290.2013.877059
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    3. Pierluigi Ciocca, 2005. "The Italian Financial System Remodelled," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-00592-1, March.
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    1. Raúl Del Pozo-Rubio & Fernando Bermejo-Patón & Pablo Moya-Martínez, 2022. "Impact of implementation of the Dependency Act on the Spanish economy: an analysis after the 2008 financial crisis," International Journal of Health Economics and Management, Springer, vol. 22(1), pages 111-128, March.
    2. Shawn Donnelly & Ioannis G. Asimakopoulos, 2020. "Bending and Breaking the Single Resolution Mechanism: The Case of Italy," Journal of Common Market Studies, Wiley Blackwell, vol. 58(4), pages 856-871, July.
    3. Samuel López-López & Raúl del Pozo-Rubio & Marta Ortega-Ortega & Francisco Escribano-Sotos, 2021. "Catastrophic Household Expenditure Associated with Out-of-Pocket Healthcare Payments in Spain," IJERPH, MDPI, vol. 18(3), pages 1-18, January.
    4. Lidija Lovreta & Joaquín López Pascual, 2020. "Structural breaks in the interaction between bank and sovereign default risk," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 11(4), pages 531-559, December.
    5. David Howarth & Lucia Quaglia, 2015. "The political economy of the euro area's sovereign debt crisis: introduction to the special issue of the Review of International Political Economy," Review of International Political Economy, Taylor & Francis Journals, vol. 22(3), pages 457-484, June.
    6. Ismael Yrigoy, 2023. "UNPACKING CAPITAL SWITCHING: Value, Rentierism and Displacement in Absolute and Relative Forms of Switching," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 47(6), pages 940-956, November.

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