Halac and Schmukler’s work points to the value of using survey information on financial service usage in assessing the effects of financial crises. A growing number of household surveys around the world contain information on access to financial services, though not enough to provide a range of “before and after” cases for econometric work. In particular, LSMS surveys, some of which contain quite detailed information on household access to certain financial services, are conducted rather infrequently, with the result that changes between before and after crises cannot readily be read off the findings.<sup>8</sup> However they can provide a benchmark for the before- _or_ after-crisis distribution of financial access. Table 1 provides a list of recent LSMS surveys containing financial sector information<sup>9</sup> together with the dates of the most recent banking crises reported for these countries. (This information is not pursued further in the present draft of this paper, but may be useful for future work.)

# _Tracking other channels_

There is no comparably clearcut way of isolating the likely distributional effects of the remaining channels. This is especially true of the last two, inasmuch as they could be experienced as a result of non-financial shocks. How is the analyst to distinguish between job losses that are due to a disruption of the payments process and those arising from a general downturn in the rest of the economy?

One approach involves identifying characteristic patterns of relative price change following a banking crisis. A temporary surge in inflation is a common occurrence following banking crises that have been associated with macro downturns (though this is not necessarily the case, and is not always observed). Inasmuch as inflation is typically inequality-increasing, this can be regarded as inequality increasing. Real wages have often fallen in such circumstances, and Diwan (2001) has shown a tendency for the share of labor in national income to decline during financial crises (counting currency crises as well as banking crises); however, sharp macroeconomic downturns have often been associated with a relative decline in the wages of highly-skilled workers, so it is not clear that wage movements will be inequality increasing.<sup>10</sup> Interest rate levels and spreads also typically increase.

An alternative to decomposing the effects into different channels is the holistic or reductionist approach of examining directly the movements of inequality and poverty around the time of crises.

> 8 It would, for example, be useful to discover whether spending patterns of households with better access to finance before the crisis are better insulated from the crisis, but this cannot readily be detected without having a post-crisis survey as well.

> 9 In addition some specialized financial sector usage surveys also explore these areas (cf. Honohan, 2004). 10 Sanchez and Schady (2003) document this pattern in their study based on household surveys for six Latin American countries.  Their sample includes “Chile in 1972-75, and again in 1982-83, Argentina in 19881990, Brazil in 1981-83, and again in 1990-92, Colombia in 1999, and Mexico in 1995. With the exception of the Mexican tequila crisis of 1995 and the Colombian recession of 1999, all of these crises have been associated with pronounced decreases in the relative demand for the most educated workers.” Sustained downturns may, however, be associated with increases in inequality (cf. Inder, 2004).

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