How do strengthened church-state relations impact religiosity and social values? To examine, we exploit the staggered introduction of the faith-based initiatives across US states. Introduced by conservative Protestants in the 1990s, these policies aimed to improve conditions for faith-based groups and increase their numbers. Our difference-in-differences analysis reveals that the initiatives increased the number of faith-based nonprofits and strengthened religiosity and conservative-religious social views — such as attitudes against LGBTQ+ and abortion. 9% of Americans who were not regular churchgoers started attending monthly or more. A back-of-the-envelope calculation suggests that the faith-based organizations established as a result of the initiatives may have reached 4.9 million followers yearly. Effects are plausibly causal; we find no systematic differences prior to implementation, evidence is robust to using novel staggered roll-out designs, restricting comparison to contiguous counties, and to estimation based on triple differences exploiting religious group heterogeneity. Effects were only felt by Protestants, while the rest continued to secularize and modernize. Our results contribute to explaining US polarization and highlight consequences of tightened church-state relations.

This paper shows that credit shocks are an important determinant of the recent rise of populism. Exploiting spatial variation in exposure to an exogenous lending cut by a large German bank in 2007-08, we find that exposure to the credit shock leads to a persistent increase in populist political preferences. To explore the shift in demand for populism activated by the shock, we measure the degree of populist rhetoric and the salience of bank-related topics to each party over time using a machine learning technique on the corpus of parliamentary speeches in Germany. A county-level analysis suggests that the underlying mechanism lies in the perceived decay of the local economy across voters that stems from the credit shock. A machine learning decomposition of the individual causal effects indicates that labour market history is the most important factor shaping the response in populist preferences.

Does the experience of a banking crisis has an effect on households' portfolios? We investigate this question by focusing on households that migrated to Germany between 1950 and the 2007 financial crisis. Combining data on migrants from 123 different countries with data on systemic banking crises, we identify the impact of the crisis' experience through the variation in the timing of arrival. We compare households' portfolios of those with a household head that experienced a systemic banking crisis in her country of ancestry with those that did not. Focusing on loan portfolios, we find that household that witnessed at least a crisis earlier in their life are less likely to hold consumer loans than those that never experienced a crisis. Moreover, we show that the probability of borrowing is lower for migrants who experienced multiple crises compared to those that experienced a single episode, suggesting a cumulative effect of banking shocks. We propose analogous evidence on real estate portfolios. Overall, our results suggest that the cost financial crises is not limited to the short-term effects driven by losses in wealth and income, but rather a long-lasting effect due to households changing their behaviour.