The changing role of finance in comparative political economy

Sofia A. Pérez

Chapter 18 in Handbook of Comparative Political Economy, 2025, pp 321-338 from Edward Elgar Publishing

Abstract: The role of finance in the political economy of states has changed in important ways over the last three decades. Up until the early twenty-first century, comparative political economists emphasized differences in national financial systems, including the degree to which banks and equity markets provided patient capital to firms. National differences, however, came under pressure with the abolition of capital controls by major OECD economies in the 1980s and 1990s. Such financial liberalization is often attributed to the influence of American finance and the International Monetary Fund. Yet, the decision by European governments to include the free movement of capital as one of the fundamental freedoms of the European Union proved just as decisive. The exposure of states to growing cross-border financial flows has coincided with a series of phenomena grouped under the label of “financialization”. The chapter considers different ways in which this term is understood and how financialization may impact economic growth. The chapter speaks to the need for greater integration between the fields of comparative and international political economy.

Keywords: Finance; Cross border financial flows; Financialization; Capital controls; Banking; Varieties of capitalism; Comparative political economy (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035327775
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