Search

AbstractThe privatization of public utilities marked a turning point in European capitalism, reshaping the relationship between the public and private spheres of the economy. However, the extent of state disinvestment varies greatly from country to country. While in some countries direct state ownership has disappeared, in others the state still acts as a reference shareholder in strategic companies. Despite their institutional similarities, Italy and Spain provide a puzzling example of this divergence. While Spain completed the privatization of all public utilities, the Italian state retains a controlling stake in many of them. Through historical case studies based on official documents, legal texts, archival research of newspaper articles, secondary sources and memoirs, this paper explains this divergence. Contributing to recent debates on patient capital and state-business interactions, it is argued that Spain completed the privatization process because the state was able to orchestrate the creation of shareholder alliances among private investors. Crucially, these investors were willing to ensure that management prioritizes long-term investment plans over the distribution of short-term financial profits. In the absence of domestic private providers of patient capital, the Italian state had to keep the role of anchor investor for itself after unsuccessfully experimenting with various privatization strategies. [ABSTRACT FROM AUTHOR]

This paper sets out to explain why Spain experienced a full-fledged sovereign debt crisis and had to resort to euroarea financial assistance for its banks, whereas Italy did not. It undertakes a structured comparison, dissecting the sovereign debt crisis into a banking crisis and a balance of payments crisis. It argues that the distinctive features of bank business models and of national banking systems in Italy and Spain have considerable analytical leverage in explaining the different scenarios of the crises in each country. This ‘bank-based’ analysis contributes to the flourishing literature that examines changes in banking with a view to account for the differentiated impact of the global banking crisis first and the sovereign debt crisis in the euroarea later. [ABSTRACT FROM PUBLISHER]