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See detailBanks and the False Dichotomy in the Comparative Political Economy of Finance
Howarth, David UL; Hardie, Iain; Maxfield, Sylvia et al

in World Politics : A Quarterly Journal of International Relations (2013), 65(4),

The wide-ranging Varieties of Capitalism literature rests on a particular conception of banks and banking, which, we argue, no longer reflects the reality of modern financial systems. We take advantage of ... [more ▼]

The wide-ranging Varieties of Capitalism literature rests on a particular conception of banks and banking, which, we argue, no longer reflects the reality of modern financial systems. We take advantage of the greater information regarding bank activities revealed by the financial crisis to consider the reality, across eight of the world’s largest developed economies, of the ‘financial power’ of banks to act as bulwarks against market forces. This article offers a ‘market-based banking’ framework that transcends the bank-based/capital market-based dichotomy that dominates Comparative Political Economy’s (CPE’s) consideration of financial systems, and argues for a future CPE research focus on the activities of banks. By demonstrating how market-based banking increases market influences on the supply of credit, we highlight an under-appreciated source of financial market pressure on non-financial companies (NFCs) that has potential impact across the range of issues that the Varieties of Capitalism (VoC) literature has seen as differentiating national systems, with implications in areas such as labor, welfare, innovation and flexibility. [less ▲]

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See detailA Peculiar Kind of Devastation: German Market-Based Banking
Howarth, David UL; Hardie, Iain

in Howarth, David; Hardie, Iain (Eds.) Market-Based Banking and the International Financial Crisis (2013)

This chapter describes the shift of the German banking industry from the traditional bank-based financial capitalism to ‘market-based banking’, which took place from the late 1990s. German banks have long ... [more ▼]

This chapter describes the shift of the German banking industry from the traditional bank-based financial capitalism to ‘market-based banking’, which took place from the late 1990s. German banks have long had high levels of market-based liabilities, but their borrowing has been from more stable wholesale markets, including via covered bonds. However, the rapid rise of market-based banking on the asset side of the balance sheet for German commercial and public sector banks, eager to expand in the context of cloistered national markets, explains the very high exposure of the German banking/financial system to the early stages of the financial crisis. German banks imported instability from the United States through the large-scale purchase of securitized loans. As a result, the German banking system was among the worst affected early in the international financial crisis yet the impact on total bank lending was limited. [less ▲]

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See detailMarket-Based Banking and the International Financial Crisis
Howarth, David UL; Hardie, Iain

Book published by Oxford University Press (2013)

Economics and political economy lack the analytical tools to explain the differing impact of the recent international financial crisis that erupted in 2007 on developed economies. The principal ... [more ▼]

Economics and political economy lack the analytical tools to explain the differing impact of the recent international financial crisis that erupted in 2007 on developed economies. The principal contribution of this edited volume is to offer a 'market-based banking' framework which transcends the dominant dichotomous understanding of financial systems in terms of credit-based and capital-based. It demonstrates why this dichotomy is obsolete through an appreciation of the activities of banks. Further, it employs 'market-based banking' to overcome the inability of existing typologies to explain financial system change. 'Market-based banking' provides a framework that is more reflective of banking in modern financial systems, and one that provides a more successful explanation of the differential impact of the recent financial crisis. The comparative and single-country chapters compare the extent of 'market-based banking' across eleven countries, including all of the G7 economies. The chapters also consider the impact of the financial crisis in terms of necessary government support and lending to non-financial companies. This volume includes work by authors who are widely respected experts in national political economies, finance, financial regulation, banking, central banking, and monetary policy. It is one of the first book-length comparative studies of the financial crisis and its impact and one of the few recent comparative studies of national banking and financial systems in any discipline. [less ▲]

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See detailIntroduction: Towards a Political Economy of Banking
Howarth, David UL; Hardie, Iain; Maxfield, Sylvie

in Howarth, David; Hardie, Iain (Eds.) Market-Based Banking and the International Financial Crisis (2013)

In this introductory chapter we first review the standard bank–credit/capital markets dichotomy used to describe national financial systems. We examine the influence of this dichotomy in the comparative ... [more ▼]

In this introductory chapter we first review the standard bank–credit/capital markets dichotomy used to describe national financial systems. We examine the influence of this dichotomy in the comparative political economy (CPE) literature, which is the disciplinary focus of most of the contributors to this volume. We explain how effectively scholars of the political economy of finance explain the phenomenon of change and then briefly describe the market-based banking model in the context of the broader national financial systems. In the penultimate section, we consider the impact of market-based banking on the domestic political economy and the impact of the international financial crisis. [less ▲]

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See detailDie Krise but not La Crise? The financial crisis and the transformation of German and French banking systems
Howarth, David UL; Hardie, Iain

in Journal of Common Market Studies (2009), 47(5), 1015-1036

This article explores what the financial crisis shows about changes in the German and French banking systems, the two largest in continental Europe. In particular, we highlight processes of ... [more ▼]

This article explores what the financial crisis shows about changes in the German and French banking systems, the two largest in continental Europe. In particular, we highlight processes of financialization – defined here as the increased trading of risk. We focus on an apparent contradiction: why did the supposedly more protectionist and conservative German banking system suffer much higher losses than the more liberalized French system? This article also examines the responses of German and French banks and governments to the crisis and speculates how far these responses might limit future financialization and shape national banking systems. [less ▲]

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