Europeanisation and the financial crisis in Greece and Cyprus

We analyse the management of the financial crisis in Greece and Cyprus as an example of different domestic settings of Europeanisation. We use generalised trust as a cultural feature that underlies the domestic administrative reform processes towards EU integration. We employ a difference-in-differences analysis of trusting effects on public administration and compare these effects over the pre-to-post 2008 financial crisis period. We argue that it is differences in the culture of administration between countries that paved the different pathways to exiting the crisis. Using a comparison between a cooperative governments’ democracy and a political polarization democracy we verify the effects of trusting levels on the distinct pathways to exiting the crisis. The implications of our findings relate to the challenges of administrative reforms associated with Europeanisation and the importance of trust in building qualitative institutions.