Social capital and the impact of the recent economic crisis: Comparing the effects of economic and fiscal policy developments

Abstract

In this contribution, we offer an analysis that evaluates the impact of the recent financial and economic crisis on social capital. An economic crisis offers a unique chance to study people's associational lives, volunteering, network-making, and trust-building under duress. Theoretical perspectives on the relationship between social capital and economic development emphasize a reciprocal relationship between the two. Therefore, we hypothesize that if economic performance is compromised, this might lead to an erosion of social capital. More importantly, however, we also argue that states can actively intervene by means of fiscal policy measures. We will illustrate our approach by comparing 29 Organisation for Economic Cooperation and Development countries before and after the crisis. Using qualitative comparative analysis, we demonstrate that imperatives related to fiscal policy stimuli provide leverage on social capital development.

Trust in Banks and Borrower Discouragement

“…Moreover, we find GettingCredit significant in reducing the likelihood of borrower discouragement in the IV- 11 A positive link between the number of systemic banking crises experienced and interpersonal trust could be explained by a positive association between economic threat and pro-social tendencies, and the establishment of social support networks (Alonso-Ferres et al, 2020). Moreover, Hörisch and Obert (2020) find state action during a crisis could even lead to social capital development, which is in line with studies that find government performance influences social capital (Rothstein and Stolle, 2008).…”

Promoting Subjective Well-Being among Rural and Urban Residents in Indonesia: Does Social Capital Matter?

“…The finding revealed that economic growth in countries with high social capital tends to be higher than those with lower social capital. Hörisch and Obert [10] also claimed a positive association between economic crisis and social capital.…”

“…From the macroeconomic perspective, research has highlighted the impact of social capital on the economic growth [9][10][11][12]. For example, a study conducted by Muringani, Fitjar and Rodríguez-Pose [12] investigated the impact on regional economic development in 21 European countries.…”

Nordic welfare states—still standing or changed by the COVID‐19 crisis?

“…This seems to have been strengthened during the crisis, as the focus has been on demand, and less on supply side measures. This demand approach further has the positive impact on social capital and reduce hardship of a financial crisis, as also shown in an article related to the last financial crisis (Hörisch & Obert, 2020), so that not only seems the policy to support employment but also that this will help in ensuring continuous cohesive societies. In this way, the crisis has not changed the overall characteristics and universality of the Nordic welfare states, but has strengthened the focus on state intervention in economies as part of how to ensure jobs and a good living standard for all citizens.…”