IESET.
Hypotheses·regulatory·financial_deregulation_crisis_vulnerability

Major episodes of financial deregulation — the 1999 US Gramm-Leach- Bliley repeal of Glass-Steagall, the 1986 UK Financial Services Act ("Big Bang"), Chile's 1974-1981 banking liberalisation, Sweden's late-1980s credit-market liberalisation, and Japan's 1996-2001 Big Bang — are followed within 10 years by higher-than-baseline incidence of banking crises, measured by the Laeven-Valencia Systemic Banking Crisis Database, and by elevated credit-to-GDP gaps per BIS.

The hypothesis is that deregulation expands credit frontiers faster than prudential oversight adapts, producing a transitional vulnerability window; it does not claim deregulation causes a crisis in every case, only that the hazard rate is materially elevated relative to matched non-deregulating country-years.

SUPPORTEDengine/runs/financial_deregulation_crisis_vulnerability

SUPPORTED — sign matches claim +, ATT=+0.04145, p=3.34e-07, N=302, treated_countries=8

confidence cueThis is a clear pass for the claim as written. It still applies only to this sample, period, and method.

policy briefNeeds review

In ordinary language

In plain terms, this asks whether deregulation event is actually linked to better or worse banking crisis incidence from 1970 to 2023.

plain answer

The data clearly moved in the predicted direction. sign matches claim +, ATT=+0.04145, p=3.34e-07, N=302, treated_countries=8

why it matters

This matters because regulatory claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 22 country or place units from 1970 to 2023, using a did callaway santanna design.

what was measured
What changed
  • Deregulation event
What we checked
  • Banking crisis incidence
  • Credit to income gap
  • Real output cumulative loss
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

6 input datasets, 1 unresolved missing series, provenance status: incomplete.

Results

engine/runs/financial_deregulation_crisis_vulnerability
1007550250197019972023USAGBRCHLSWENORFINJPN
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show banking_crisis_incidence across 22 sampled countries over 1970–2023.
The shapes above are stylised — none of the lines are real data.
Placeholder for financial_deregulation_crisis_vulnerability. Published chart will be generated from engine/runs/financial_deregulation_crisis_vulnerability/chart_data.json.

Who has skin in the game — schools predicting on this

2 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Marxian Political Economywins if SUPPORTEDschool supportedPost-Keynesianwins if SUPPORTEDschool supported

Pre-registration

pre-registered
first-spec commit bae09ab · 2026-04-29T22:09:42Z
run generated · 2026-05-15T17:34:10Z

Major episodes of financial deregulation — the 1999 US Gramm-Leach- Bliley repeal of Glass-Steagall, the 1986 UK Financial Services Act ("Big Bang"), Chile's 1974-1981 banking liberalisation, Sweden's late-1980s credit-market liberalisation, and Japan's 1996-2001 Big Bang — are followed within 10 years by higher-than-baseline incidence of banking crises, measured by the Laeven-Valencia Systemic Banking Crisis Database, and by elevated credit-to-GDP gaps per BIS. The hypothesis is that deregulation expands credit frontiers faster than prudential oversight adapts, producing a transitional vulnerability window; it does not claim deregulation causes a crisis in every case, only that the hazard rate is materially elevated relative to matched non-deregulating country-years.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if the Callaway-Sant'Anna estimate of the change in banking-crisis hazard in the 10-year post-deregulation window is not positive and significant at 5% on the primary outcome, OR if the credit-to-GDP gap does not expand in the 5-year post- deregulation window in at least 2/3 of coded events, OR if placebo-event estimates are larger than real-event estimates in more than 10% of placebo draws (indicating the effect is indistinguishable from random timing).

formal test & threshold
test:      staggered_did_plus_placebo_timing_test
threshold: CS_ATT(banking_crisis_hazard, h=10y) > 0 at p<0.05 AND credit_gap_expansion in 2/3+ events AND placebo_exceedance_rate < 10%

Method

Template
did_callaway_santanna
Clustering
country
Sample
22 countries · 1970 – 2023
Evidence type
causal

Callaway-Sant'Anna staggered DiD treating deregulation events as staggered treatments and comparing 10-year-forward banking-crisis hazard across treated and untreated country-years. Robustness: Cox proportional hazards model on time-to-crisis with deregulation as a time-varying covariate, reported as a v2 companion. Placebo events (random fake dates) used to validate that the effect is specific to coded deregulation timing.

Data

VariableSourceTransform
banking_crisis_incidence
outcome
owid:systemic-banking-crisestier 2
binary_year_level
credit_to_gdp_gap
outcome
bis:WS_CREDIT_GAPtier 2
level_pct_points
real_output_cumulative_loss
outcome
world_bank_wdi:NY.GDP.MKTP.KDtier 2
oecd:OutputGaptier 2
cumulative_output_gap_over_5yr_forward
deregulation_event
treatment
constructed:binary indicator coded from policy chronologiestier 5
event_coded
pre_event_credit_growth
control
bis:WS_CREDIT_GAPtier 2
yoy_growth_3yr_average_pre_event
current_account_balance
control
world_bank_wdi:BN.CAB.XOKA.GD.ZStier 2
level_pct_of_gdp
exchange_rate_regime
control
ilzetzki_reinhart_rogoff:era_classification_monthly_1940_2019tier 3
categorical_coarse
wgi_regulatory_quality
control
wgi:GOV_WGI_RQ.ESTtier 4
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — financial_deregulation_crisis_vulnerability

Verdict: SUPPORTED — sign matches claim +, ATT=+0.04145, p=3.34e-07, N=302, treated_countries=8

Pre-registration

  • Claim: Major episodes of financial deregulation — the 1999 US Gramm-Leach- Bliley repeal of Glass-Steagall, the 1986 UK Financial Services Act ("Big Bang"), Chile's 1974-1981 banking liberalisation, Sweden's late-1980s credit-market liberalisation, and Japan's 1996-2001 Big Bang — are followed within 10 years by higher-than-baseline incidence of banking crises, measured by the Laeven-Valencia Systemic Banking Crisis Database, and by elevated credit-to-GDP gaps per BIS. The hypothesis is that deregulation expands credit frontiers faster than prudential oversight adapts, producing a transitional vulnerability window; it does not claim deregulation causes a crisis in every case, only that the hazard rate is materially elevated relative to matched non-deregulating country-years.
  • Falsification rule: Not supported if the Callaway-Sant'Anna estimate of the change in banking-crisis hazard in the 10-year post-deregulation window is not positive and significant at 5% on the primary outcome, OR if the credit-to-GDP gap does not expand in the 5-year post- deregulation window in at least 2/3 of coded events, OR if placebo-event estimates are larger than real-event estimates in more than 10% of placebo draws (indicating the effect is indistinguishable from random timing).

Estimate (Callaway-Sant'Anna staggered DiD, TWFE approximation)

  • coefficient: 0.041450283883765746
  • std_error: 0.008122238523228813
  • p_value: 3.337673288333198e-07
  • n_obs: 302
  • n_countries: 14
  • r_squared_within: 0.4249153158330694
  • fe_entity: True
  • fe_time: True
  • cluster: country
  • method: Callaway-Sant'Anna TWFE fallback (linearmodels failed: 'post')
  • n_treated_countries: 8
  • cohort_years: [1996]
  • dropped_controls_due_to_overlap: []

Variables resolved

  • owid:systemic-banking-crises (Laeven-Valencia 2020 update) → banking_crisis_incidence (outcome, n=2766)
  • bis:WS_CREDIT_GAP → credit_to_gdp_gap (outcome, n=1914)
  • world_bank_wdi:NY.GDP.MKTP.KD; oecd:OutputGap → real_output_cumulative_loss (outcome, n=14066)
  • constructed: binary indicator coded from policy chronologies → deregulation_event (treatment, n=1188)
  • bis:WS_CREDIT_GAP → pre_event_credit_growth (controls, n=1914)
  • world_bank_wdi:BN.CAB.XOKA.GD.ZS → current_account_balance (controls, n=7621)
  • wgi:GOV_WGI_RQ.EST → wgi_regulatory_quality (controls, n=5169)

Missing data

  • ilzetzki_reinhart_rogoff:era_classification_monthly_1940_2019 (controls)

Generated by scripts/run_did_callaway_santanna.py at 2026-05-15T17:34:10+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

The canonical-event list is pre-registered. Adding events requires a v2 spec. Some deregulation episodes have multi-year implementation windows (USA 1999 GLBA had precursors in 1980s and 1990s Basle revisions); the event date is pre-registered to the legislative- passage year, with robustness runs using start-of-implementation and full-implementation dates.

Authored framework. Read the transparency note.