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This paper deals with partial results from interdisciplinary research. These results contribute to the understanding of the phenomenon of public debt and specifically the debt system as it is understood in the context of global financialization; this phenomenon is expressed in the prominence of financial capital and the concentration of power in actors linked to stock market experiences. At the same time, the interpretation of banking secrecy in this context reveals a dichotomy between public interest and private interest. Este trabajo aborda resultados parciales desde una investigación interdisciplinaria[1]. Se trata de resultados que contribuyen a la comprensión del fenómeno de la deuda pública y específicamente el sistema de la deuda tal y como es comprendida en el contexto de la financiarización mundial[2]; tal fenómeno se expresa en protagonismo del capital financiero y concentración de poder en actores ligados a experiencias bursátiles. Al mismo tiempo la interpretación del secreto bancario en este contexto revela una dicotomía entre el interés público y el interés privado. [1] La investigación cuenta con el aporte de Phil. Cesar Gómez Calderón, Bach. Pablo Abarca, Máster Edwin Zamora, Licda. Rocío Chamorro Tasies y Doctor Marino Marozzi. (Equipo interdisciplinario de la investigación) [2] El concepto financiarización global explica una fase del capitalismo a partir de los años 70. Como rasgo central el equipo Fattorelli define el extremo poder del capital financiero mundial a través del control del sistema de la deuda pública (Fattorelli, 2013, pp. 12-17).

Fiscal policies have been limited and without a capacity to generate employment as a result of the processes of financial deregulation and liberalization prior to the Global International Financial...

Financial deregulation since the 1980s has been stimulating fierce competition among banks and influencing financial stability across the world. In pace with this, Bangladesh's banking industry is also experiencing intense competition since it is composed of many banks. The empirical evidence on competition and stability widely debate to date, perhaps for not considering the potential nonlinearity. Therefore, our study aims to explore the nonlinear impact of competition on the financial stability of Bangladeshi banks over 2010-2017. For achieving this objective, we compute the Boone indicator and Z-score using bank-level data to measure competition and stability, respectively, and examine the nonlinear dynamics of competition-stability nexus employing threshold analysis in a panel setup. Our findings confirm that the competition-stability relationship is nonlinear and implies that financial stability is more substantial (weaker) in a less (more) competitive market. Our results bear specific policy implications.JEL Classification: G21, G28How to Cite:Dutta, K. D., & Saha, M. (2021). Nonlinearity of Competition-Stability Nexus: Evidence from Bangladesh. Etikonomi, 20(1), 55 – 66. https://doi.org/10.15408/etk.v20i1.15984.

Recent regulatory proposals tie the systemic importance of a financial institution to its complexity. However, we know little about how complexity affects a bank's behavior, including its risk management. Using the gradual deregulation of banks' nonbank activities during 1996-1999 as a natural experiment, we show that the frequency and magnitude of operational risk events in U.S. bank holding companies have increased significantly with their business complexity. This trend is particularly strong for banks that were bound by regulations beforehand, especially for those with an existing Section 20 subsidiary, and weaker for the other banks that were not bound and for nonbank financial institutions that were not subject to the same regulations to begin with. These results reveal the darker side of post-deregulation diversification, which in earlier studies has been shown to lead to improved stock and earnings performance. We use operational risk events as a risk management measure because (i) the timing of the origin of each event is well identified, and can be years before it is materialized into a loss in the balance sheet, and (ii) the risk events can serve as a direct measure of materialized failures in risk management without being influenced by the confounding factors that drive asset prices, such as implicit government guarantees. Our findings have important implications for the regulation of financial institutions deemed 'systemically important,' a designation tied closely to their complexity by the Bank for International Settlements and the Federal Reserve.

This paper investigates the convergence in cost efficiency among the Indian commercial banks during 1998–2015. We follow a two-step approach: We first employ the double bootstrap procedure of Simar and Wilson (J Econom 136:31–64, 2007) for estimating the bias-corrected cost efficiency scores. Using a dynamic panel framework, we then apply the concepts of β-convergence and σ-convergence from the growth convergence literature to evaluate the convergence process in the banking industry. Our results indicate large difference in mean efficiency among banks across various ownership categories. Further, we observe strong evidence favouring convergence in cost efficiency, driven by both “catching-up” and “lagging-behind” phenomena. The speed of convergence was found highest in state-owned banks, followed by foreign-owned and domestic private banks.

El presente trabajo analiza los aspectos institucionales que caracterizaron el funcionamiento del mercado cambiario argentino durante la etapa de la posconvertibilidad (2002-2017) y su impacto sobre la dinámica del sector externo. La revisión de los esquemas regulatorios vigentes durante las tres etapas que comprende este periodo, esto es, la de construcción del marco regulatorio del Mercado Único y Libre de Cambios (2002-2011), de control de cambios (2012-2015) y de liberalización (2016-2017), nos permite concluir que las reformas estructurales instrumentadas por el nuevo gobierno no solo no han revertido la tendencia hacia el deterioro del sector externo observada desde el 2011, sino que incluso han tendido a incorporar mayores riesgos sistémicos. The present paper analyzes the institutional factors that have characterized the Argentine foreign exchange market throughout the post-convertibility era (2002- 2017) and discusses their impact on the dynamics of the external sector. The revision of the different regulatory schemes adopted during this period, namely, the construction of the free and unified exchange market (2002-2011), the stage of foreign exchange controls (2012-2015), and the recent experience of financial deregulation (2016-2017), suggests that the structural reforms implemented by the new government have not reverted the tendency towards external imbalance observed since 2011. Indeed, such reforms have introduced larger systemic risks. Ce travail analyse les aspects institutionnels qui ont caractérisé le fonctionnement du marché des changes argentin durant la période de la post convertibilité (2002-2017) et son impact sur la dynamique du secteur externe. L’examen des schémas régulateurs en vigueur durant les trois étapes que compte cette période, à savoir, celle de la construction du marché régulateur du Marché Unique et Libre de Changes (2002-2011), de contrôle des changes (2012-2015) et de libéralisation (2016-2017), nous permet de conclure que les réformes structurelles mises en place par le nouveau gouvernement ont non seulement renversé la tendance vers la détérioration du secteur externe observée depuis 2011, mais qu’elles ont aussi tendu à incorporer de plus grands risques systémiques. O presente trabalho analisa os aspectos institucionais que caracterizaram o funcionamento do mercado cambial argentino durante a etapa da pós-conversibilidade (2002-2017) e seu impacto sobre a dinâmica do setor externo. A revisão dos esquemas regulatórios vigentes durante as três etapas que compreende este período, isto é, a de construção do marco regulatório do Mercado Único e Livre de Câmbios (2002-2011), de controle de câmbios (2012-2015) e de liberalização (2016-2017), nos permite concluir que as reformas estruturais instrumentadas pelo novo governo não só não tem revertido a tendência até a deterioração do setor externo observada desde 2011, como inclusive tendem a incorporar maiores riscos sistêmicos. Fil: Feldman, Germán David. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina. Universidad Nacional de San Martín. Instituto de Altos Estudios Sociales; Argentina Fil: Formento, Alejandro. Universidad Nacional de Moreno. Departamento de Economía y Administracion; Argentina

Recent contributions to the comparative political economy literature claim that liberal market economies are vulnerable to asset booms and busts because of financial deregulation, shrinking...

This article examines the effects of regulatory reform on productivity growth in the Bangladesh banking industry. We use a unique balanced panel dataset comprising bank-level annual data from the e...

This article examines the politics of capital control liberalisation through an archival analysis of Britain’s exchange controls abolition. While the political economy consensus states that capital controls were abandoned because of a desire to boost the competitiveness of national financial centres and the ascendance of laissez-faire ideas, this article will challenge this interpretation. The James Callaghan and Margaret Thatcher governments were concerned by the worsening performance of British industrial exporters, and exchange control abolition constituted a strategy to depreciate sterling and thus boost export competitiveness. Yet this beggar-thy-neighbour strategy risked spooking global markets and provoking a run on sterling. Thus, the Thatcher administration publicly masked its intentions by emphasising that this deregulation was motivated by laissez-faire ideology. This article thus reconceptualises the role of competition and ideas in spurring capital control liberalisation by demonstrating the importance of industrial competitiveness and the role of ideas as rhetoric.

This chapter aims to identify the real drivers of financial deregulation in Japan. Japan’s financial deregulation drivers clearly changed over time. In the late 1960s and the early 1970s, the liberalization of capital movement in Japan caused an administrative shift from its conventional rigid regulatory regime. From the mid-1970s, a rapid increase of Japanese government bonds issuances, as well as financial innovation, acted to remove the barriers between the banking and the securities businesses. From the mid-1980s, the pressure from the United States, as well as from domestic depositors and banks, urged the Japanese financial authorities to liberalize the financial market. It is evident that the drivers of financial deregulation in Japan in the 1980s were not only the pressure from abroad (as generally accepted), but that the deregulation was also driven by domestic interests including fiscal reasons.

Was there financial deregulation in the United Kingdom in the late twentieth century? There had been several episodes of financial regulation and deregulation in British financial history. Deregulation from the 1820s to the 1870s was followed by a long period of stable and light regulation. That lasted until WWII. After that the trend was upwards. The first statutory banking regulations in more than 150 years were introduced in 1979 and then in 1987. These Acts were accompanied or followed by Basel rules. In the 1990s the Financial Services Authority was established and regulation increased steeply thereafter. The compliance burden rose steadily throughout. Deregulation in these years is hard to find.

The deregulation of the financial system in France in the 1980s and the French commitment to the freedom of capital, as recently pointed out by Rawi Abdelal, is ‘quite curious’ and even doubly paradoxical: how to understand, first, that the financial liberalization has occurred while the left was in power? Second, how to explain that Colbertist France took the lead for financial deregulation at a world scale feeding the hypothesis of a so-called ‘Paris Consensus’? Based on the primary archives of the French Treasury and of the Banque of France this contribution aims to demonstrate that the financial deregulation in France is managed by the State in order to facilitate its increasing indebtedness on a globalizing money market.

Since the 1980s, income inequality has increased substantially in several countries. Yet the political logic that triggered rising inequality in some places but not in others remains poorly understood. This paper builds a theory that links central bank independence to these dynamics. It posits the existence of three mechanisms that tie central bank independence to inequality. First, central bank independence indirectly constrains fiscal policy and weakens a government's ability to engage in redistribution. Second, central bank independence incentivizes governments to deregulate financial markets, which generates a boom in asset values. These assets are predominantly in the hands of wealthier segments of the population. Third, to contain inflationary pressures, governments actively promote policies that weaken the bargaining power of workers. Together, these policies strengthen secular trends towards higher inequality according to standard indicators. Empirically, the analysis finds a strong relation between central bank independence and inequality, as well as support for each of the mechanisms. From a policy perspective, our findings contribute to knowledge on the undesirable side effects of central bank independence.

We analyze the effect of the geographic expansion of banks across U.S. states on the co-movement of economic activity between states. Exploiting the removal of interstate banking restrictions to construct time-varying instrumental variables at the state-pair level, we find that bilateral banking integration increases output co-movement between states. The effect of financial integration depends on the nature of the idiosyncratic shocks faced by states and is stronger for financially dependent industries. Finally, we show that integration increases the similarity of bank lending fluctuations between states and contributes to the transmission of deposit shocks across states.

This chapter focuses on the rationale and objectives of financial deregulation in Italy from the late 1970s to the early 1990s. Deregulation appears as a complex adjustment process to major changes, within the domestic economy and in the international environment, more than the result of a clear-cut plan. In fact, Italy had to cope with difficulties in the manufacturing sector, an exogenous, anti-inflationary, change in monetary policies and a new European legal framework. Her adjustment process largely depended upon the ability of the Bank of Italy, the central bank, to provide sounding analyses and promote reforms in accordance with the emerging European regulatory framework. In the long regulatory cycle started in the mid-1970s the Bank of Italy acted as the main actor, whilst lawmakers had a minor part until 1990, when a new banking law eventually abolished the Banking Law of 1936 catching up with the second European Banking Directive.

Despite the magnitude of remittances as an alternative source of investment financing in Africa, the financial sector in Africa has significantly remained underdeveloped and unstable. Finding a solution to Africa's financial deregulation problems has proved tenacious partly because of inadequate literature that explain the nature of Africa capital and financial markets which has shown to be unorganised, spatially fragmented, highly segmented and invariably externally dependent. We examine the structural linkages between remittances and financial sector development in Africa. Panel data on indices of remittances was regressed on indices of financial sector development in fifty-three (53) African countries from 1986 through 2017 using the Pooled Mean Group (PMG) estimation procedure. We accounted for cross-sectional dependence inherent in ordinary panel estimation and found a basis for the strict orthogonal relationship among the variables. Findings revealed a positive long-run relationship between remittances and financial development with a significant (positive) short-run relationship. It is suggested that, while attracting migrants' transfers which can have significant short-run poverty-alleviating advantages, in the long run, it might be more beneficial for African governments to foster financial sector development using alternative financial development strategies.

Cataloged from PDF version of article. Thesis (Master's): Bilkent University, Department of Economics, İhsan Doğramacı Bilkent University, 2020. Includes bibliographical references (leave 39-44). I perform an empirical analysis to investigate the direct effect of income inequality and financial deregulation on the occurrence of systemic banking crises based on a panel of 133 countries over the period 1970–2018. Differently from earlier empirical studies, this study focuses both on income inequality and financial deregulation levels. Findings based on a multivariate logit model to estimate the probability of systemic banking crisis do not provide any reliable evidence for the existence of a direct relationship between the various measures of inequality and the occurrence of banking crises. I also find that there is no direct link between financial liberalization and the occurrence of banking crises. Furthermore, my analysis shows that income inequality and financial deregulation do not act together to directly impact the likelihood of banking crises. However, this study provides evidence that the reduction of banking capital regulations and prudential supervision may increase the likelihood of banking crisis in the short run. Additionally, the results of this study support the previous findings in the literature that the level of private credit is the most robust predictor of the systemic banking crises. by Eray Kaan Karabulut M.A.

Dissertation presented as the partial requirement for obtaining a Master's degree in Statistics and Information Management, specialization in Risk Analysis and Management Throughout the last century, severe financial crises hit the financial markets, whose effects then spread all over the world. Taking the recent example of the 2008 subprime crisis, it is now clear it had its main drivers in excess credit supply and record household debt, which had been spiking since the 80’s and 90’s decades. Allied to weak risk management policies and the deregulation in financial markets, along with subprime credit concession and speculation regarding complex financial products, the households’ debt levels rose to a point that helped generate one of the greatest financial crises in history, whose effects were felt around the globe. From the moment these crises happened, various authors studied and analyzed the reasons behind the events leading to them, and how they reached the magnitude to cause such an impact. Several studies concerning households’ indebtedness and credit supply were made regarding many countries and provide a closer look at how these indicators are related and how they react in periods marked by financial crises as the ones described above. Some of them were able to prove that, indeed, there is a connection not only between them, but also with financial markets liberalization and weak risk management policies. After establishing a relationship between credit supply and household debt, and connecting both to business cycles, the core goal of this study is to evaluate the evolution of household debt in Portugal since the introduction of the Euro and which factors contributed with the most impact to that same evolution. Our work will start with a literature review to explain the credit-driven household demand channel concept and the dynamics implied and proceed with a statistical analysis of key indicators focusing on explaining the behavior of household debt in Portugal. These will include a time-adjusted correlations analysis and a linear regression model. Finally, we will present the conclusions reached through these methods, which resulted in a good performing model composed of five independent variables explaining the evolution of household debt to GDP in Portugal in different moments in time, and present future study possibilities to enhance the knowledge on this topic.

In 1968, facing a tumultuous banking environment, commercial bankers framed bank lobbying as the act of translating the complex U.S. financial and economic systems for legislators and regulators. Inspired by Science and Technology Studies research, this article demonstrates that the translations of the U.S. financial system offered by bank lobbyists were not merely descriptions of the complex banking system. Instead, their translations reflected a process that sought to create networks of congressional and public support and enroll other actors as spokespersons for these translations. The article details how the acceptance for these translations proved to be a long process of reformulations, reconfigurations, and failures. There were three primary lobbying strategies used by large U.S. commercial banks: maintaining close relationships with high-ranking decision makers, making public statements to gain public support for their translations of the economy, and advocating for long and expert studies with heavy bank consultation. The article also highlights the techniques used by bank lobbyists during this period to alter the banking environment: legislation drafting, editorial writing, letter writing, report writing, private consultations, meetings with reporters, and public statements. These lobbying techniques and strategies were instrumental in establishing the Hunt Commission and translating and actualizing the blueprint for financial “deregulation.”

This paper examines the effect of financial deregulation on economic growth in Nigeria using annual data from 1986 to 2016. An index was used to capture financial deregulation. The index was generated using Principal Component Analysis from six variables namely: bank denationalisation, restructuring and interest rate liberalisation, prudential regulation, directed credit abolition, free entry into banking and capital market liberalisation. Johansen Cointegration test and Error Correction Model (ECM) were used to analyze the effect financial deregulation on economic growth. The result shows that there is long run relationship between financial deregulation and economic growth. Furthermore, the result reveals that financial deregulation has positive effect on economic growth both in the short run and long run, but the effect is not significant in the short run. The error correction term shows that the model corrects its short run disequilibrium by 35% annually.

O presente trabalho abordará a primazia dos interesses de Wall Street no governo Trump. A partir do breve exame do processo de financeirização iniciado na década de 1970, será analisada a relação entre Trump e Wall Street, mormente as iniciativas adotas pelo presidente em favor do setor financeiro.Palavras-chave: Wall Street; governo Trump; desregulação financeira The present paper will address the primacy of Wall Street’s interests in Trump government. Starting from a brief analysis of the process of financialization initiated in the 1970s, the relation between Trump and Wall Street will be analyzed, particularly the initiatives adopted by the president in favor of the financial sector.Key words: Wall Street; Trump government; financial deregulation

This study estimates the impact of financial deregulation on top income shares. Using the novel econometric method of constructing synthetic control groups, we show that the "Big Bang"-deregulations in the United Kingdom in 1986 and Japan 1997-1999 increased the share of pre-tax incomes going to top earners by over 20 percent in the U.K. and over 10 percent in Japan. The effect is strongest in the top five percentiles in the U.K. whereas it is mainly driven by the lower part of the top decile in Japan. The findings are robust to placebo tests, alternative ways to construct synthetic controls and scrutiny of post-treatment trends. Higher earnings among financial sector employees appear to be an important mechanism behind this result.

This article estimates the cost efficiency of the commercial banks of Bangladesh in the context of financial reform. Employing the single-stage stochastic frontier analysis (SFA) model, the study uses a unique balanced panel data set comprising bank-level annual data from the dominant commercial banks in Bangladesh for the period 1983–2012. The results show that bank cost has fallen due to financial deregulation. Our results from the data envelopment analysis do not vary significantly that we obtained from the SFA. In addition, the presence of politically linked directors on the bank board has an adverse effect on efficiency. These findings suggest that further reforms aiming at removing all sorts of political influence should continue to ensure competitive environment in order to achieve cost efficiency in the financial sector of the country.

Summary: Despite (or because of) this liberalization demanded by banks and multinational firms, the economic and financial crises have continued to take different forms since 1991: the financial bubble, the balance of payments crisis, the financial panic, bankruptcy or moral hazard. Risk taking and speculation tend to become the main activities of banks in the financial sector. After a strong call in 2008 for a reform of the financial system, particularly with the BIS (Bank for International Settlements) or the European Union (MSU, Single Supervisory Mechanism, and MRU, Single Resolution Mechanism), the risks of a crisis are always high. Under the pressure of the banking system, the separation between commercial banks and investment banks is not always effective. Secondly, international financing rules are not always respected, and several banks have been accused of fraudulent transactions, particularly in the United States. Finally, financial innovation becomes an effective means of speculation. It facilitated tax evasion and encouraged governments to reduce taxes and public investment. The question arises whether banks still finance the economy, while still benefiting from the support of central banks. New systems come competition in the financial field, including crypto-currencies (bitcoin), pension funds and Islamic banks., Document de travail sur Conflits et guerre économique » Pré-publication Grenoble 2019 Résumé : Malgré (ou à cause) de cette libéralisation réclamée par les banques et les firmes multinationales, les crises économiques et financières ont continué à se succéder sous des formes différentes depuis 1991 : la bulle financière, la crise de la balance des paiements, la panique financière, la banqueroute ou l'aléa moral. Les prises de risque et la spéculation tendent à devenir les activités principales des banques dans le secteur proprement financier. Après un appel fort en 2008 en faveur d'une réforme du système financier, notamment auprès de la BRI (Banque des Règlements Internationaux) ou de l'Union européenne (MSU, Mécanisme de surveillance unique, et MRU, Mécanisme de résolution unique). Cependant, La séparation entre les banques commerciales et les banques d'investissement n'est pas toujours effective, sous la pression du monde bancaire, dont plusieurs membres ont été accusées d'opérations frauduleuses, notamment aux Etats-Unis. L'innovation financière devient un moyen efficace de spéculation. Elle a facilité l'évasion fiscale et incité les gouvernants à réduire les impôts et les investissements publics. La question se pose de savoir si les banques financent encore l'économie, tout en bénéficiant toujours du soutien des banques centrales. Des systèmes nouveaux viennent la concurrence dans le domaine financier, notamment les crypto-monnaies (bitcoin), les fonds de pension et les banques islamiques.

The Feldstein–Horioka (FH) puzzle, that is the strong correlation between saving and investment in a world where obstacles to capital mobility are limited, has been studied extensively since it was exposed in 1980. Even though the theoretical and empirical literature has examined many of its potential causes, the puzzle persists. This paper aims at shedding further light on the issue by investigating the relationship between saving and investment in South Africa since 1946 using fractional integration and cointegration techniques to account for high persistence in the series. We find evidence of fractional cointegration between saving and investment, indicating some degree of persistence in the gap between the two variables. We also find a structural break in saving and investment ratios to GDP around 1980, which roughly coincides with the start of a financial deregulation process in South Africa. While fractional cointegration holds before the break, it does not thereafter. In other words, while ...

This paper uses staggered bank branching deregulation across states in the United States to examine the impact of the resulting increase in the supply of credit on college enrollment from the 70s to early 90s. A significant advantage of our research design is that it produces estimates that are not confounded by wealth effects. We find that lifting branching restrictions raises college enrollment by about 2 percentage points (4%). Our results rule out alternative interpretations to the credit constraints channel. First, the effects are largest for low and middle income families, while insignificant for upper income families as well as bankrupt families who would have been unaffected by the increased access to private credit. Second, the effect of lifting branching restrictions subsided immediately following periods of increased loan limit through government student loan programs. We also show that household educational borrowing increased as a result of lifting branching restrictions. Our results provide novel evidence that credit constraints play an important role in determining household college enrollment decisions in the United States.

This paper investigates the effects of financial deregulation on the energy enterprises' operational risks in China, based on 230 Chinese energy enterprises' yearly data spanning from 2003 to 2018. The results show that financial deregulation can lower the energy enterprise's operational risks through easing financing constraints and reversing the financialization tendency of energy enterprises. In addition, the impact of financial deregulation is heterogeneous across different features of energy enterprises. After replacing core indicators, changing model settings, and solving endogenous problems, the above conclusions are still robust, which provides robust evidence from the perspective of the interest rates liberalization.

The paper argues that financial deregulation incentivized financial firms to take excessive risks and over-expand because it turned social insurance against systemic risk into a common pool (or open) resource. The increased size and complexity of deregulated financial markets in turn raised the social cost of imposing discipline in financial markets to prohibitive levels. Because this undermined the credibility of the regulators' threats of sanction, their deterrence strategy was from then on subgame imperfect. This suggests that moral hazard can be explained by the market expectation that regulators would act like a rational maximizer rather than by the things they irrationally did or not do.

The financialisation literature has grown over the past decades. Despite a generally accepted definition, financialisation has been used to describe different phenomena. We distinguish between financialisation of non-financial companies, households and the financial sector and use activity and vulnerability measures. We identify seven financialisation hypotheses in the literature and empirically investigate them in a cross-country analysis for 17 OECD countries and two time periods, 1997–2007 as well as 2008–17. We find different financialisation measures are only weakly correlated, suggesting the existence of distinct financialisation processes. There is strong evidence that financialisation is linked to asset price inflation and correlated with a debt-driven demand regime. Financial deregulation encourages financialisation. There is limited evidence that market-based financial systems are more financialised. Foreign financial inflows do not seem a main driver. We do not find indication that an investment slowdown precedes financialisation. Our findings suggest financialisation should be understood as a variegated process, playing out differently across economic sectors and countries.

This chapter investigates the SOEs’ efficiency losses from the perspective of their negative spillovers to economic growth. In the process of economic transition, SOEs do not only entail efficiency losses in themselves, but also hinder economic growth through financial repression and ownership discrimination. The dragging effect is not apparent because financial resources can leak from the SOE sector to the private sector and private finance develops fast. Using China’s provincial panel data for the period 1985 -2004, we have partially confirmed the theory. The result lends supports to further financial deregulation and SOE reform.

While economic theory suggests a wide range of potential determinants of income inequality, there is little consensus regarding the most relevant ones. Such a lack of consensus reflects, to an important extent, the impact of model uncertainty. Using model-averaging techniques—specifically WALS (weighted-average least squares)—to get at a robust set of determinants, our results underscore the multiplicity of factors behind rising national-level inequalities. In the cross-section, the level of development and demographics, as well as unemployment and globalization, seem to be key drivers. Trade and financial globalization have asymmetric effects, with trade integration associated with lower inequality, and financial globalization with higher inequality. Financial deregulation and technological change seem to be important drivers of inequality, particularly in advanced economies.

Purpose– The purpose of this paper is to examine the trends of cost efficiency (CE) of Indian banks in response to financial deregulation programme launched in early 1990s. More specifically, the findings of this paper offer empirical testing of the basic underlined hypothesis that the CE of banks will rise in the more liberal and competitive environment.Design/methodology/approach– The study employs input-oriented data envelopment analysis (DEA) models that incorporate the quasi-fixed inputs to compute the cost, technical, and allocative efficiency scores for individual banks. The unbalanced panel data spanning from the financial year 1992-1993 to 2007-2008 are used for obtaining efficiency measures. In addition, the panel data Tobit model has been applied to investigate the bank-specific factors explaining variations in the CE.Findings– The empirical findings pertaining to the trends of efficiency measures suggest that: first, deregulation programme has had a positive impact on the CE of Indian banks, and the observed increase in CE is entirely due to improvements in technical efficiency (TE); second, the ranking of ownership groups provides that public sector banks are more cost efficient along with the foreign than private banks; and third, there is a strong presence of global advantage hypothesis in the Indian banking industry. The results of post-DEA analysis reveal that size and exposure to off-balance sheet activities are the key determinants of CE. The results also support the existence of bad luck or bad management hypothesis in Indian banking industry.Practical implications– The practical implication of the research findings is that the financial deregulation programme seems to be successful in achieving the CE gains in the Indian banking industry. This explicitly signals that the cautious approach of banking reforms adopted by Indian policy makers has started bearing fruit in terms of the creation of an efficient banking system, which is immune to any sort of financial crisis, and resilient to both internal and external shocks.Originality/value– The present study offers new evidence on the time-series properties of cost, allocative, and TEs of Indian banks. The DEA models used in this study explicitly incorporate the equity as a quasi-fixed input, which accounts for “risk” in the bank efficiency measurement.

This paper examines how financial deregulation and the partisan underpinnings of deregulation shaped the path of income inequality in the United States. Using time-series data from 1914 to 2010, we assess the effect of partisan politics on financial deregulation and, in turn, the effect of deregulation on income inequality. We find that financial deregulation has generally declined when Democrats attain more power in Washington and that deregulation has contributed to rising inequality. We also learn that the partisan effect on deregulation has diminished since the early 1980s, suggesting that one way partisan politics has contributed to the recent rise in inequality is related to convergence on matters of financial deregulation. We explore several potential explanations for this post–1980 partisan convergence, finding evidence supporting the idea that globalization, the increasing availability of credit, and shifts in campaign finance were contributing factors.

How have credit markets evolved in the long-run around the world? I present evidence based on a novel sectorally disaggregated dataset on credit to the private sector for 120 countries for 1940-2014, as well as new series on total credit going back to 1910. Over the last 50 years, household credit has risen dramatically not only in advanced but also emerging economies. Mortgage lending only accounts for part of the story: particularly in developing countries, consumer credit accounts for much of this growth. I show that corporate lending has essentially stalled relative to GDP since around 1980, which is not explained by the development of global bond markets, cross-border lending, or trade credit. While the main drivers are country-specific, the rise of household credit correlates with financial deregulation, information sharing institutions, demographic shifts, inequality, and legal frameworks.

The chapter analyzes in detail the successful reform of the Australian model. Just as in Sweden, it took Australia 25–30 years to change a largely failing model. The process can be divided into several stages: financial deregulation and a series of structural reforms; from a banana republic to a new narrative; debt reduction and continued reforms creating a new model; and, finally, the reform process coming to a halt.

Within the financialisation literature, a number of approaches identify the coexistence of financial expansion and productive stagnation. Yet there is no consensus on which direction causality operates between these two phenomena. This impasse has been widened by the lack of attention paid to the role of statecraft strategies in mediating possible causal mechanisms. This article contributes to rectifying this shortcoming by focusing on the governance advantages granted to states through financial deregulation. By presenting archival evidence on Britain’s 1971 Competition and Credit Control deregulation, this article lends support to financialisation accounts that argue that weaknesses in the productive economy spurred financial expansion, yet it also indicates that the state’s desire for depoliticised forms of governance played a crucial role in mediating this relationship. This further suggests that International Political Economy should focus on the strategic manner in which states relate to mar...

Buscamos fazer algumas aproximações entre o fenômeno do narcotráfico com mecanismos do sistema financeiro e de desregulamentação no capitalismo. Compreender os determinantes estruturais da expansão do narcotráfico foi um elemento importante de análise. Contrapomos as medidas de desregulamentação financeira e monetária com as medidas de regulamentação/fiscalização do dinheiro ilícito, além de analisar se existe interesse de Estados/governos no capitalismo em combater os capitais ilícitos.

Financial activity has become increasingly important in affluent economies in recent decades. Because this ‘financialization’ distributes costs and benefits unevenly across groups, politics and policy likely affect the process. Therefore, this article discusses how changes in the power of organizations representing the ‘winners’ and ‘losers’ of financialization affect its pace. An analysis of the United States from 1949–2005, shows that when unions are stronger, and when the Democratic Party is in power and is more reliant on the support of working-class voters, financialization is slower. In contrast, when the financial industry is more highly mobilized into politics, financialization is faster. The study also finds that financial deregulation was one policy translating the political power of these actors into economic outcomes.

The current financial crisis is the 19th such crisis in the post-war period in advanced economies. Recent literature classifies the Nordic crises in Norway, Sweden and Finland in late 1980s and early 1990s among the Big Five crises that have happened before the current crisis, which is now of a global nature. This paper outlines the developments of the Nordic crises, reasons behind them and crisis management by the authorities. Relatively more emphasis is placed on the Finnish crisis, as it was the deepest one. The paper concludes by considering the lessons that can be drawn from the Nordic crises.

We argue that the effect of inward foreign direct investment (FDI) on domestic human capital (HC) accumulation depends on the degree of financial deregulation. Using 383 observations from provincial yearly panel data of the reform period in China, we find the following: FDI has a positive and significant interaction effect with financial deregulation on HC in both least squares dummy variable and system generalized method of moments estimations that address the endogeneity of all important explanatory variables including FDI, financial deregulation, and their interaction term. That is, a higher level of financial deregulation increases the marginal effect of inward FDI on domestic HC.

For most households, home ownership is the largest wealth component that has become more accessible through innovation and deregulation in mortgage markets. This paper studies the factors driving home equity withdrawal (HEW) at the household level using Dutch survey data. In the Netherlands, house prices were growing fast and mortgage expenses are to a large extent tax deductible. Expectations and perceptions do seem to play an important role in HEW. Withdrawers tend to be more positive about house price developments and – although having lower income – less concerned about their future economic situation. HEW can have a significant impact on both households and the economy, with most of the equity released being reinvested in the housing sector and only a small share used to finance consumption expenditure.

Technological diffusion via FDI is essential for the economic growth of backward economies. However, institutional and policy barriers may slow down technology diffusion. Using a simple theory based on Acemoglu (2009, ch. 18), we predict that there exists an interaction (i.e., a complementary) effect between inward FDI (pool of available world frontier technologies) and financial deregulation (enhancing absorptive capability via lowering institutional and policy barriers) in promoting growth. We test the predictions using the panel data on Chinese provinces during the reform and opening-up period. The Chinese experience is appealing because of the symbiotic financial deregulation and inflow of FDI. We find robust evidence that there is a significant interaction effect between FDI and the level of financial deregulation in promoting economic growth. This furthers our understanding of the reform and opening-up strategy of China.

The nucleus of the recent global crisis revolves around the interaction of global imbalances and financial deregulation. This relationship arose in the framework of the highest level of economic interdependence the world has seen. Beyond considering whether Latin American ability to absorb the external shock was the product of better economic fundamentals, the favorable external context, or a combination thereof, in this case, the economies of the region managed to avoid systemic financial collapse. The current global economic panorama is complex and the variety of possible scenarios diverse and Latin American economies provide examples of both strengths and weaknesses. The challenge for these nations will be to consolidate their recent achievements and ensure sustainable economic growth.

Emerging market experience over the past two decades has revealed the tenuous links between external financial integration and faster growth, and the proclivity of such integration to fuel costly crises. Emerging markets learned, converging to the middle ground of the macroeconomic trilemma. Following their crises of 1997–2001, emerging markets added financial stability as a goal, self‐insured by building up international reserves, and adopted a public finance approach to financial integration. The global crisis of 2008–09 illustrated that the advanced economies “overshot” the optimal degree of financial deregulation, while the resilience of the emerging markets validated their public finance approach to financial integration.

In this paper, I examine how the lending relationships between banks and their borrowers affect the quality of analysts’ earnings forecasts after financial deregulation in Japan. My findings show that short-term lending relationships improve the quality of analysts’ earnings forecasts and that these earnings forecasts are useful for predicting future returns. In contrast, long-term lending relationships decay the quality of forecast and are not valuable for the prediction of future returns. These empirical results indicate that the informational advantage that commercial banks acquire is short-term and that the costs of lending relationships surpass the informational benefits in the long run.