Things Fell Apart: Categorization During a Foreign Currency Market Crisis

Abstract

While prior studies underscore how categories facilitate market stability, little is known above categorization processes during market instability. This study examines how actors categorize in unstable markets. We conduct an inductive inquiry into a foreign currency market instability in Nigeria using data from the nation’s central bank, news articles, and interviews from actors in the foreign currency market. We propose that market instability is a form of category crisis. We further identify two mechanisms of category shifting (the process of attributing causes to category crisis) and category sifting (the enactment of inferences of the category shifting) as important components of categorization processes during market instability. We examine the implications of our findings from category in market literature and illustrate how market instabilities can provide unique contexts for categorization processes.