The authors emphasize an overlooked raison d’être for public banks. They argue that limiting public banks to filling the gaps left by private banks, the standard argument in economics, neglects a very important dimension of public banks, that is, their capacity to act countercyclically and thereby stabilize access to credit during economic downturns. Taking a cue from Hyman Minsky, they point to the immanent volatility of financial markets dominated by private actors. In order to counter destabilizing tendencies, the presence of institutions with the logic of action that differs from that of the market is necessary. As public banks are not primarily concerned with profitability, they can play this role. To a certain extent, their presence in the market is an automatic stabilizer because public banks provide credit with long maturation. In times of crisis, they can also be used for discretionary intervention, that is, opening up new credit lines.
Browse by title
Ana Rosa Ribeiro de Mendonça and Simone Deos
Richard Eccleston, Richard Krever and Helen Smith
This chapter establishes the conceptual and theoretical foundations for the ensuing volume. It summarizes the debates concerning the key features of federal governance before providing an overview of the existing explanations of change in federal systems, with a particular emphasis on the application of new institutionalism to explanations of ‘federal dynamics’. The second section of the chapter focuses on the literature on the impact of financial and economic crises of federal governance before providing an empirical account of the economic impact of the 2008–9 financial crisis on the 12 cases included within the volume. The chapter concludes by outlining how an actor-centred institutionalism is applied to the case studies that follow.