The Dragon and the Elephant Enter the Matrix: Asset-Classes, Financial-Positions, and the Politics of Securitization in China and India.

Abstract: During the transformation of formerly planned economies, the development and regulation of securities finance is an important and poorly understand process. For the governments involved securitization - the creation of securities and the shift of financial assets from banking into securities- has been a complex political challenge. For students of political economy, securities finance can seem a particularly opaque sphere in which the interests, incentives, and important institutions are often unclear. This paper presents a framework for analyzing the political dynamics of securities finance in developing and transitional economies. The distinction between equity and debt on the one hand, and the distinction between issuers of securities and investors in securities on the other hand, together create a useful framework - the asset-class/financial-position matrix - for political analysis of the creation, exchange, and use securities. Based on documentary, quantitative, and interview-based evidence collected during field research between 1997- 2001 the paper deploys this matrix to explore the politics of securitization through case studies of stock exchange development in China and India. I find that the autonomy of central-state-elites within the dominant coalition and the structure of property-rights help explain varying outcomes in the governance of securities finance. [ABSTRACT FROM AUTHOR]