Institutional development and bank competitive transformation in late industrializing economies: the Spanish case

Garcia-Calvo, Angela (2016) Institutional development and bank competitive transformation in late industrializing economies: the Spanish case. Business and Politics, 18 (1). pp. 27-62. ISSN 1469-3569

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Abstract

This paper explores the contribution of national institutions to the competitive transformation of big commercial banks in late industrializing countries through the analysis of the Spanish case. The paper uses a comparative historical analysis to establish that strategic coordination between the state and large banks is a structural feature of the banking sector but may be articulated differently depending on the balance of power between states, banks and industry, the preferences of these actors, and their resources. Using evidence from Spain since the late 1970s, the paper argues that in this country, state-bank coordination was articulated as a non-hierarchical system of negotiated interactions and mutual exchanges of benefits between small groups of decision-makers at the government, the central bank, and big banks. Under the Spanish model, large banks contributed to the fulfillment of public policy objectives to develop the central bank's capacity to conduct monetary policy, strengthen supervision of the banking system, and modernize the financial sector. In exchange, big banks benefited from a favorable regulation that enabled them to restructure, consolidate the leadership of a new generation of bankers, and reach the efficiency frontier of their industry. The paper contributes to the literature of institutionalism by questioning the traditional dichotomy between market and strategic coordination. It also contributes to the literature of competitiveness by stimulating debate about the role of the state in supporting the transformation of big business.

Item Type:	Article
Official URL:	https://www.cambridge.org/core/journals/business-a...
Additional Information:	© 2016 V.K. Aggarwal and published under exclusive license to Cambridge University Press
Divisions:	Management
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
Date Deposited:	03 Oct 2018 08:40
Last Modified:	05 Apr 2024 23:27
URI:	http://eprints.lse.ac.uk/id/eprint/90296

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