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Show Results For
- All HBS Web
(7,559)
- People (6)
- News (1,531)
- Research (4,990)
- Events (58)
- Multimedia (97)
- Faculty Publications (3,690)
- September 2011
- Article
Political Instability: Effects on Financial Development, Roots in the Severity of Economic Inequality
By: Mark J. Roe and Jordan I. Siegel
We here bring forward strong evidence that political instability impedes financial development, with its variation a primary determinant of differences in financial development around the world. As such, it needs to be added to the short list of major determinants of... View Details
Keywords: Financial Development; Political Instability; Government and Politics; Finance; Growth and Development; Economics; Equality and Inequality
Roe, Mark J., and Jordan I. Siegel. "Political Instability: Effects on Financial Development, Roots in the Severity of Economic Inequality." Journal of Comparative Economics 39, no. 3 (September 2011): 279–309. (We here bring forward strong evidence that political instability impedes financial development, with its variation a primary determinant of differences in financial development around the world. As such, it needs to be added to the short list of major determinants of financial development. First, structural conditions first postulated by
Engerman and Sokoloff (2002) as generating long-term inequality are shown here empirically to be exogenous determinants of political instability. Second, that exogenously-determined political instability in turn holds back financial development, even when we control for factors prominent in the last decade's cross-country studies of
financial development. The findings indicate that inequality-perpetuating conditions that result in political instability are fundamental roadblocks for international organizations like the World Bank that seek to promote financial development. The evidence here includes country fixed effect regressions and an instrumental model inspired by Engerman and Sokoloff's (2002) work, which to our knowledge has not yet been used in finance and which is consistent with current tests as valid instruments. Four conventional measures of national political instability — Alesina and Perotti's (1996) well-known index of instability, a subsequent index derived from Banks' (2005) work,
and two indices of managerial perceptions of nation-by-nation political instability — persistently predict a wide range of national financial development outcomes for recent decades. Political instability's significance is time consistent in cross-sectional regressions back to the 1960's, the period when the key data becomes available, robust
in both country fixed-effects and instrumental variable regressions, and consistent across multiple measures of instability and of financial development. Overall, the results indicate the existence of an important channel running from structural inequality to political instability, principally in nondemocratic settings, and then to financial
backwardness. The robust significance of that channel extends existing work demonstrating the importance of political economy explanations for financial development and financial backwardness. It should help to better understand which policies will work for financial development, because political instability has causes, cures, and effects quite distinct from those of many of the key institutions most studied in the past decade as explaining financial backwardness.)
- 01 Feb 2021
- News
Locally Grown
exit.” The payoff has been the success of companies like Lightning Systems. Founded in 2008 to turn heavy vehicles into fuel-saving hybrids, the company faced extinction as zero-emissions systems gained prominence in the late 2010s. With... View Details
- 01 Dec 2018
- News
Collaborative Cures
Business Administration “When I looked at the health care system through a systems engineering lens, I could see it as a network of multiple parts that needed to be optimized and restraints that had to be... View Details
- February 2011 (Revised May 2012)
- Teaching Note
Stanley Black & Decker, Inc. (TN)
Teaching Note for 211-067. View Details
- 13 Jul 2020
- News
Locally Grown
companies, we would have never succeeded in any of them if we thought that we could get in and out in three to five years.” Among the companies funded by Aravaipa is Lightning Systems. When the fund first invested in the company, it was developing hydraulic hybrid... View Details
Keywords: April White
- 26 Mar 2014
- Research & Ideas
How Electronic Patient Records Can Slow Doctor Productivity
where informal but highly effective relationships may exist, introducing an EHR system might generate formal processes that, at a certain level, become counterproductive. "In large practices, where staff might be less likely to interact... View Details
- Mar 2012
- Article
Fixing What's Wrong with U.S. Politics
In America today there's a growing sense that the political system is broken and that its ineffectiveness is a major threat to U.S. competitiveness. Why do so many think the political system is not working?... View Details
- 19 Nov 2001
- Research & Ideas
Alfred Chandler on the Electronic Century
technologies developed by the Sony Corporation. In this same astonishingly brief period, Japan's computer makers had become Europe's dominant suppliers of large computer systems and had captured the U.S. market in memory chips.... View Details
- 02 Oct 2012
- First Look
First Look: October 2
Evidence from a Field Experiment Authors: Kevin Boudreau, Tom Brady, Ina Ganguli, Patrick Gaule, Eva Guinan, Karim Lakhani, and Tony Hollenberg Abstract We present the results of a field experiment conducted within the Harvard Medical School View Details
Keywords: Sean Silverthorne
- 24 Mar 2002
- Research & Ideas
Are Assets Only for America’s Wealthy?
nature and delivery of the IDA program could be the answer, he says. Rather than administering IDAs through brick-and-mortar channels—banks, paperwork, and more paperwork—why not use technology to speed up, standardize, and improve View Details
Keywords: by Carla Tishler
- 01 Sep 2024
- News
Turning Point: Make Your Life Count
Rosita Najmi (MBA 2009) (Illustration by Gisela Goppel) Rosita Najmi (MBA 2009) (Illustration by Gisela Goppel) We were refugees. Mom scraped together all we had (three suitcases and $3,000) and bundled my three siblings and me onto a plane bound for Idaho. My father... View Details
- Profile
Jonathan Arena
generators, great at coming up with ideas. But ideas need wheels. It’s not enough to have a brilliant idea or a brilliant product. You need a brilliant system to deliver content and capture value in order to have an impact.” In a variety... View Details
- 15 Apr 2022
- Blog Post
How I Spent My HBS 2+2 Deferral: Kelly Ogiesoba
execution of world largest solar and battery system (409MW, 2hr.) to test the ability of storage to replace an old fossil unit. Finally, I got exposure to EVs (electric vehicles) by helping to manage the execution of a utility scale EV... View Details
- 22 May 2020
- Blog Post
Remembering Well and Making Meaning of Memorial Day
me that the military does not have a monopoly on selfless service – countless businesses and non-profits, both domestic and around the world, are doing incredible things to alleviate human suffering, drive systemic change, and provide... View Details
- 01 Dec 2019
- News
Shaping Leaders Who Understand Business and the Environment
component to the Reimagining Capitalism course this year. He calls the module “What can I do now?” That’s the question he was getting from students after they read cases such as “JetBlue: Relevant Sustainability Leadership,” in which executives for the airline... View Details
Keywords: April White
- 01 Dec 2018
- News
Case Study: Your Data, Your Health
during a Blavatnik Fellowship in Life Science Entrepreneurship at HBS. The startup employs a system for collecting reproductive cell samples from a tampon, which the customer sends to the lab for genomic analysis. The lab then provides... View Details
Keywords: Jen McFarland Flint
- 01 Dec 2017
- News
A Safer—and Speedier—Way to Name Your Startup
what’s out there to avoid any unpleasant surprises.” Besides similarity of name, search results incorporate information on industry sectors and trademark classes. “What trademark is about is the likelihood of confusion, so the system... View Details
Keywords: Julia Hanna
- 01 Oct 1997
- News
Shaping the Way Business Does Business: HBR at 75
students in the early 1920s, the idea for the magazine was quickly taken up by HBS faculty, who charged Arch Shaw, the Chicago publisher of System magazine (which later became Business Week), with producing the publication under the... View Details
- 01 Oct 1998
- News
Merton Named University Professor
insurance contracts. An elected member of the National Academy of Sciences and a past president of the American Finance Association, Merton is a leading figure in the School's Global Financial Systems Project and has taught extensively in... View Details
- 21 Oct 2013
- News
Moving the Needle
hospital stays and doctors' visits showed her the health care system up close. "I realized that I really wanted to make a difference," she recalls. At Harvard, this self-described "contrarian" recalls having to push her idea of promoting... View Details