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Julian Gruin

management has underpinned growth in China to the extent that one banker summarized it pithily thus: ‘moral hazard is state policy’.1 Yet such techniques of financial regulation and policy, whilst necessary, are clearly insufficient to secure the broader stability of a system of financial intermediation. The belated recognition of the myth of the self-regulating financial market is opening up greater scope for understanding and parsing the social foundations of financial governance. The management of socio-­economic uncertainty should be distinguished from the more

in Communists constructing capitalism
The case of British Labour
John Callaghan

. It was now thought that the Thatcher reforms had 88 European social democracy under global economic crisis reinvigorated the British economy and restructured it to succeed in conditions of globalisation. Success was all the shinier for the fact that Germany was struggling economically after reunification and the Japanese economy was stagnant. One common economic experience, however, concerns the activities of the financial institutions. The growth in financial intermediation was outstripping the growth of economies. The trend accelerated from the early 1980s and

in European social democracy during the global economic crisis
Abstract only
From the Bank of Scotland’s origins to HBOS and crisis
Jonathan Hearn

control. Central banks are the obvious paradigmatic case, with their special responsibilities, in various articulations with government treasuries, for such things as currency supply and interest rates. Many other banks and financial organisations are situated more clearly in the private sphere, but because all are collectively involved in national and transnational patterns and flows of financial intermediation and investment, they are perennially of concern to governments. If modern capitalist society is characterised by this mutual reinforcement of core economic and

in Salvage ethnography in the financial sector
Open Access (free)
Issues, debates and an overview of the crisis
Shalendra D. Sharma

policy responses to large capital inflows, weaknesses in domestic financial intermediation and poor corporate governance resulted in the build-up of vulnerabilities, while banking fragility, high leverage and currency and maturity mismatches made these economies highly susceptible to reversals in capital flows. However, these weaknesses remained unnoticed as long as these economies were growing. Despite these similarities, each country also suffered from its own unique sets of problems, and varied in its response to the crisis. Also, since the most common criticism of the

in The Asian financial crisis
Mike Buckle and John Thompson

bank will lead to a ‘run’ on that bank (see section 15.2.2 ); the danger that the problems affecting one bank will lead to loss of confidence in other banks (i.e. systemic risk, also discussed in section 15.2.2 ). banks perform essential services to the economy such as financial intermediation and operation of the payments mechanism and interruption of

in The UK financial system (fifth edition)
Open Access (free)
The evolving international financial architecture
Shalendra D. Sharma

profits and dividends discourage direct foreign investment, reduce international trade and limit domestic business opportunities. In the presence of capital controls, financial intermediation is less efficient, since savings are not allocated to the most efficient uses, and the range of available financial products and services tends to be narrow and of poorer quality. Also, as capital controls tend to create a wedge between domestic and external financial markets, the resultant differentials between domestic and international interest rates may create problems. That is, the

in The Asian financial crisis
Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

diverse and competitive system, and brought benefits to the economy, such as more efficient credit allocation and financial intermediation (not to mention, providing Indonesians with many more options for financial services), banking deregulation also posed challenges that the authorities failed to meet. First, in 1983–88, the seven state banks’ share of total outstanding bank credit hovered around 65 per cent, but after three years of liberalization their share had dropped to 56 per cent in 1991 and to 40 per cent by the end of 1997 (Chou 1999, 37). State banks have

in The Asian financial crisis
Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

domestic default. Specifically, the increased level of bank’s foreign indebtedness relative to the lending base of the banks increased their exposure to exchange-rate risk, and the increased level of bank credit to GDP increased their exposure to domestic contraction. While weak domestic financial intermediation and poor corporate governance of Thai banks have been widely blamed for their difficulties, it was the increased exposure of the Thai banks that was primarily the reason behind their problems – something that could not have been corrected by tighter supervision

in The Asian financial crisis