Banks and the political economy of the sovereign debt crisis in Italy and Spain

Lucia Quaglia, Sebastián Royo

Research output: Contribution to journalArticlepeer-review


ABSTRACT: This paper sets out to explain why Spain experienced a full-fledged sovereign debt crisis and had to resort to euroarea financial assistance for its banks, whereas Italy did not. It undertakes a structured comparison, dissecting the sovereign debt crisis into a banking crisis and a balance of payments crisis. It argues that the distinctive features of bank business models and of national banking systems in Italy and Spain have considerable analytical leverage in explaining the different scenarios of the crises in each country. This ‘bank-based’ analysis contributes to the flourishing literature that examines changes in banking with a view to account for the differentiated impact of the global banking crisis first and the sovereign debt crisis in the euroarea later.

Original languageEnglish
Pages (from-to)485-507
Number of pages23
Issue number3
Publication statusPublished - 4 May 2015


  • bank business models
  • banking crisis
  • euroarea crisis
  • financial crisis
  • Italy
  • sovereign debt crisis
  • Spain

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