ONCE BITTEN, TWICE SHY:EXPERIENCES OF A BANKING CRISISAND EXPECTATIONS OF FUTURE CRISES

Survey data from Bulgaria show that people who had experienced a loss during a banking crisisare significantly more likely to expect a new crisis. This result holds despite 12 years betweenthe earlier crisis and the survey, and the dramatically improved performance of the financialsector and the economy in the meantime. However, we find that earlier experiences affectexpectations only for less informed individuals. Individuals who are more informed about theeconomy are unaffected by their prior experiences....