A Tale of Two Crises: The Competing Institutional Logics of the Financial Crisis

• In Event: 265 - Regular Session. Economic Sociology: Regulatory and Local Responses to Financial Crisis: Discursive, Cultural and Social Structural Foundations

Abstract

It has been five years since the height of the most recent financial crisis. Consequences of the crisis remain in some parts of the economy, including an on-going foreclosure crisis. Other parts of the economy, such as corporate profits and capital markets, have recovered much more quickly. This due in part to the government’s response to the crisis, which was characterized by successful monetary intervention but more limited fiscal intervention. Although there is a large literature on the financial crisis, most of it focuses on the causes of the crisis while much less academic attention has been given to the government’s response to it. Using systematic text analysis and in-depth case study methodology, I show that the government’s response was 1) highly contested within the government and 2) ultimately a consequence of the prevailing institutional logic, which was shaped by the financial and regulatory reforms that began in the United States in the 1980s. This logic implies strong government support of markets by providing liquidity but little government intervention in markets otherwise.

Author

• Alicia Eads, Cornell University