"Keefer proposes a new approach to explain why the costs of crisis are greater in some countries than in others. He begins with the premise that many crises result from the willingness of politicians to cater to special interests at the expense of broad social interests. A parsimonious model...

Government responses to banking crises are less likely to favor special interest groups when elections are near, voters are better informed about the costs of inefficient government decisions, and governments have multiple veto players. Keefer investigates the political determinants of...