Banks on the Brink: Global Capital, Securities Markets, and the Political Roots of Financial Crises 1108489885, 9781108489881

Table of contents :
Cover
Front Matter
Political Economy of Institutions and Decisions
Table of Contents
List of Figures
List of Tables
Preface
Acknowledgments
1 The Politics and Economics of Financial Instability
Understanding Banking Crises: National Market Structure and International Capital
The Structure of National Financial Markets
The International Dimension: Global Capital
Summarizing the Argument
The Plan of the Book
2 Banking Crises, Capital Flows, and Financial Market Structure
Banking Crises in the Industrialized World
What Causes Banking Crises? Capital Inflows and Financial Market Structure
Capital Inflows: Net Flows
Capital Inflows: Gross Flows
Capital Inflows and Banking Crises
Financial Market Structure
Financial Market Structure and Banking Crises
Conclusion
3 Capital Inflows, Market Structure, and Banking Crises: Empirical Evidence
Determinants of Banking Crises in OECD Countries
Dependent and Independent Variables
Control Variables
Determinants of Banking Crises: Results
Determinants of Banking Crises: Robustness
Determinants of Banking Crises: Testing Alternative Explanations
Size of the Banking System
Bank Concentration
Partisanship and Legislative Majorities
Capital Inflows, Market Structure, and Banking Crises: How and Why?
Bank-Level Analysis: Capital Adequacy and Insolvency Risk
Results: Tier 1 Bank Capital and Commercial Bank Z-Scores
Conclusion
Data Appendix
4 O Canada? Unraveling the Mystery of Canadian Bank Stability
The Political Roots of the Canadian Banking Market
The Birth of a Modern Banking System
Political Origins of Canada’s Securities Markets
Canadian Capital Markets from 1900 to the Great Depression
The Great Depression: A Window of Opportunity
Closes for National Securities Regulation
Canada’s Underdeveloped Securities Markets Endure
Re-evaluating Canadian Bank Stability
Conclusion
5 Finanzplatz Deutschland: German Bank Stability and Its Decline
The Origins and Development of the German Financial System
German Banking in the Nineteenth Century: The Emergence of the Three-Pillar System
German Securities Markets in the Nineteenth Century
Political Unification and the Shift of German Finance to Berlin
Arrested Development: The Politics of German Securities Markets, 1870–1945
The Panic of 1873 and the Political Backlash
against Securities Markets
The 1896 Stock Exchange Law
The Interwar Era: The 1931 Financial Crisis
and Nazi Repression of Securities Markets
Postwar German Finance: Bank Dominance, Subordinate Securities Markets, Persistent Stability
Securities Markets: A Secondary Role in Postwar German Finance
Persistent Stability: The Absence of Systemic
Banking Crises in Germany, 1871–2008
Finanzplatz Deutschland: The Development of German Securities Markets, 1985–2000
The Frankfurt Coalition and the Impetus for Reform
Finanzplatz Deutschland Emerges
Re-evaluating German Banking Stability
Conclusion
6 Policy Responses: What to Do (and Not to Do) about Financial Instability
Global Imbalances: Should We Worry?
Problems with Alternative Domestic Structure Arguments
Regulation: What Kind, and by Whom?
Should Bank Capital Requirements Be Increased?
Should Countries Impose Capital Controls?
Too Big to Fail: Should We Break Up Large Banks?
Should We Re-introduce Glass-Steagall?
Who Should Regulate?
Concluding Thoughts
References
Index
Political Economy of Institutions and Decisions