<abstract xmlns="http://www.w3.org/1999/xhtml"><p><bold>Background:</bold> The European financial crisis has affected most of the EU member states, and European institutions have had to create new financial instruments to counter the impact. Most effects in the economic and political spheres can be attributed to high unemployment and changes in governments in peripheral countries (Greece, Ireland, Portugal, Spain and Romania). <bold>Objectives:</bold> The aim of this paper is to demonstrate the economic and political effects of the European financial crisis in some peripheral countries that have implemented austerity policies. <bold>Methods/Approach:</bold> The methodology used is mixed: an analysis of the primary economic variables of the selected countries in comparison to those of countries with low-risk premium was performed, and the relation between the bailouts and elections was presented. <bold>Results:</bold> The exacerbation of the crisis in the Eurozone is mainly due to the high political costs of austerity measures and not the high level of public spending and/or the alternations in the governments of peripheral countries. <bold>Conclusions:</bold> The European financial crisis is primarily a result of weak economic governance, and its effects are differentiated. The peripheral countries possess the highest rates of unemployment, and there is a higher tendency towards political instability in rescued countries.</p></abstract>

Background: The European financial crisis has affected most of the EU member states, and European institutions have had to create new financial instruments to counter the impact. Most effects in the economic and political spheres can be attributed to high unemployment and changes in governments in peripheral countries (Greece, Ireland, Portugal, Spain and Romania). Objectives: The aim of this paper is to demonstrate the economic and political effects of the European financial crisis in some peripheral countries that have implemented austerity policies. Methods/Approach: The methodology used is mixed: an analysis of the primary economic variables of the selected countries in comparison to those of countries with low-risk premium was performed, and the relation between the bailouts and elections was presented. Results: The exacerbation of the crisis in the Eurozone is mainly due to the high political costs of austerity measures and not the high level of public spending and/or the alternations in the governments of peripheral countries. Conclusions: The European financial crisis is primarily a result of weak economic governance, and its effects are differentiated. The peripheral countries possess the highest rates of unemployment, and there is a higher tendency towards political instability in rescued countries.

Two Effects of the European Financial Crisis

Institute of Economic and Social Studies, University of Veracruz, Mexico

Business Systems Research Journal

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Two Effects of the European Financial Crisis"}

Background: The European financial crisis has affected most of the EU member states, and European institutions have had to create new financial instruments to...

Two Effects of the European Financial Crisis

Published Online: Sep 10, 2014

Page range: 46 - 60

Received: Dec 19, 2012

Accepted: Jun 11, 2013

DOI: https://doi.org/10.2478/bsrj-2014-0009

Keywords
financial crisis, governance, bailouts, European institutions, peripheral countries

© 2014 Edgar J. Saucedo Acosta and Samantha Rullán Rosanis

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Two Effects of the European Financial Crisis

Published Online: Sep 10, 2014

Page range: 46 - 60

Received: Dec 19, 2012

Accepted: Jun 11, 2013

DOI: https://doi.org/10.2478/bsrj-2014-0009

Keywordsfinancial crisis, governance, bailouts, European institutions, peripheral countries

© 2014 Edgar J. Saucedo Acosta and Samantha Rullán Rosanis

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
financial crisis, governance, bailouts, European institutions, peripheral countries