Drawing broadly on the literature on the political economy of the financial crisis, the paper looks at deregulation as … opportunistic profit (rent) seeking was more the cause rather than the effect of moral hazard and regulation failure. Deregulation … deregulation promised in turn incentivized financial firms to invest in tilting the political process to shape government policy …

banking crises. This effect, however, is conditional on the level of liberalization of the financial market. At lower levels … of liberalization, banks have stronger incentives to escape regulation's constraints and to take advantage of regulatory … lags. At high levels of liberalization, the effect of regulatory lags is curbed, possibly by market discipline. Statistical …