Banking System Stability and Public Security: the Cases of the Collapse of the Commercial Banks “Snoras” and “Ūkio bankas” in Lithuania

Abstract

Abstract The stability of the banking system is analyzed in the article as an important condition of security of the society. The article analyzes the short term and long term impact of the collapse of two commercial banks, “Snoras” and “Ūkio bankas”, on the public attitude about the banking activities in Lithuania. Employing new institutionalism theoretical approaches, an analytical model is constructed based on the reconstruction of discursive devices of two Lithuanian Internet news portals, Delfi.lt and Lrytas.lt. The positions of the main process actors (Bank of Lithuania, Heads of the State, and media itself) within a changing structural environment are assessed. The article argues that new institutionalism presents an appropriate theoretical framework for characterizing the processes analyzed, taking into account calculations of actors and explaining development of political processes, and taking into account circumstances of consensus reached in the former stages of political processes. Employing the discursive institutionalism approach enables the understanding of actors as actively influencing and changing structural environment. Five stages of bank collapse are defined according to the reflections in the news media portals. They differ by their continuity, intensity and by the means used for (re-)constructing discourses, comparing former case of collapse with the latter one. For instance, the position of the society caused by the “Snoras” bank collapse can be characterized as a classical case of cognitive dissonance: commercial banks are treated by the society as untrustworthy and at the same time society’s behavior shows that society is benefiting from the bank services. Politically the problem analyzed seems like a marginal one without any important influence on mainstream political processes. It seems that the situation after the bank collapse is different from early post-Soviet times when “safety of savings” was an important argument in the fight of political parties for the power. However, taking into account the influence of these two banks’ collapses for international country ratings we note that collapse as a “frequent phenomenon” worsened Lithuania’s position. “Normatively” interpreting the collapse cases we may argue that actors of the political field (mainstream media channels included) coped with the dynamic situation by appropriately minimizing negative outcomes of the collapse of the two commercial banks.