Good and Bad Banking on Europe's Periphery: Pathways to Catching Up and Falling Behind

Arbeitspapier | Working paper

In this paper we seek to explain why bank performance has varied so dramatically during and after the financial crisis on Europe’s periphery, both across states and within them. Our dependent variable is bank performance defined in terms of credit provision and banks’ contribution to financial stability. Our independent variable is the particular mix at play between political/social purpose and what we call ‘market authority’ - the importance of market incentives, signals and pricing within a particular financial ‘ecosystem’. “Economic nationalism” or the politicization of local and regional banks has often imbued banks with social and political goals, serving the economy at different levels, and is one major source of political/social purpose. But the latter must be constrained by market authority. We argue that for optimal bank performance, economic nationalism or political/social purpose must be constrained by market authority, otherwise a political logic (e.g. cronyism, a lack of professionalism, and deficits in banking expertise) can easily subvert or distort credit provision and undermine financial stability.

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• ISSN: 1868-7601
• Extent: Seite(n): 28
• Language: Englisch
• Notes: Status: Erstveröffentlichung; begutachtet (peer reviewed)

References and Relationships

• Bibliographic citation: KFG Working Paper Series (83)

Classification and Topics

• Subject: Wirtschaft ; Wirtschaftssektoren ; Wirtschaftspolitik ; EU ; Ostmitteleuropa ; Südeuropa ; Finanzkrise ; Bankgewerbe ; Bankenaufsicht ; Kreditvergabe

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Epstein, Rachel A. ; Rhodes, Martin
• Event: Veröffentlichung
• (who): Freie Universität Berlin, FB Politik- und Sozialwissenschaften, Otto-Suhr-Institut für Politikwissenschaft Kolleg-Forschergruppe "The Transformative Power of Europe"
• (where): Deutschland, Berlin
• (when): 2017

Further information

• URN: urn:nbn:de:0168-ssoar-57674-6
• Rights: GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln