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Emerging Market Bank Rescues in an Era of Finance-Led Neoliberalism

Thomas Marois

Discussion Papers from Research on Money and Finance

Abstract: In the current conjuncture, the international community is gripped by the problem of how to mitigate the impact of financial crisis on emerging markets while curbing the drift towards protectionism. The historical experiences of Mexico and Turkey in this regard are instructive. Both banking sectors have suffered harsh crises since the mid 1990s, were rescued, and then restructured without closing off their economies. To date, liberal and institutional political economic analyses of emerging market have mostly framed the problem with principal reference to crisis and the formal market-enhancing institutions of banking. The debates have then revolved around how either greater or lesser exposure to financial imperatives can improve stability and resolve developmental challenges. By and large, these debates have not addressed the problem of bank rescues and the underlying social relations of power that shape changes to the institutions of banking. The following, by contrast, compares Mexico�s 1995 and Turkey�s 2001 bank rescues from a historical materialist framework. Therein, the rescues are interpreted as historical processes that have revamped preexisting institutionalized sets of social power relations. Above all else, the impact of banking crisis-driven rescues has meant the historicalstructural deepening of financial imperatives in Mexican and Turkish society. This has had the socio-political consequence of reinforcing the power of finance and further eroding once legitimate channels of popular influence over national development. The experiences of Mexico and Turkey have implications for the international community�s response to the current world financial crisis.

Date: 2009
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