 Economic Backwardness in Security PerspectiveRichard Carney MPRA Paper from University Library of Munich, Germany Abstract: Modern political economies are distinguished from each other by the institutions that mediate actors’ interactions, falling somewhere along a spectrum between pure market and non-market mechanisms. But how did these institutions originally emerge? With regard to the financial sector, I argue that higher levels of national security threats in combination with economic backwardness lead to a financial system more dominated by banking relationships. To evaluate the argument, I conduct a focused comparison of Japan and Germany before WWII since they had similar political and legal institutions and were both ‘backward’, but differed with regard to the security threats they faced. Germany confronted more menacing threats from neighboring great powers as well as greater domestic unrest following unification in 1871, which led the government to direct lending to sectors vital to the nation’s security via banks. Japan, by contrast, did not face the same level of threats to its security, and consequently securities markets were more dominant. Keywords: Economic History; Germany; Japan; Government; War; Finance; Financial Institutions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:3279 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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