Extractive Liquidity: Finance and Collapse in Fragile States

Title: Extractive Liquidity: Finance and Collapse in Fragile States Authors: Scott M. Brown, Jempsy Fils-Aime, Paul LaTortue, Adam WelkerKeywords: Haiti, institutional collapse, governance substitution, financial sector, education spending, elite containment, V-Dem, property rights, institutional co-production Description:This dataset and accompanying research examine an institutional paradox in Haiti: sustained growth in the formal banking sector amid a prolonged decline in rule of law, judicial independence, and anti-corruption enforcement. Drawing on panel data from major Haitian banks (2003–2019), merged with Varieties of Democracy (V-Dem) institutional quality indicators and UNESCO education spending data, the study reveals that capital accumulation in fragile states can persist through informal resilience mechanisms and elite-controlled financial structures. The findings challenge conventional assumptions in institutional and agency theory by showing how elites strategically withhold or channel capital to reinforce stability without enabling democratic reform. In particular, the study shows that private education spending—while correlated with reduced corruption and greater civic participation—is also associated with declines in rule of law and polyarchy. This pattern suggests a strategy of elite containment rather than transformation. The dataset includes longitudinal financial statements for Haiti’s five largest banks, matched to governance indicators and education finance variables. The analytical scripts (in Python) and regression outputs provide a replicable foundation for studying governance dynamics in weak-state environments. This study contributes to international business theory by proposing a multidimensional framework of governance substitution and institutional co-production. It underscores the need for inclusive, bottom-up financial reform and offers comparative policy insights from other fragile states such as Lebanon, Zimbabwe, Afghanistan, Somalia, and Venezuela.