Show Less
You do not have access to this content

Financial Underpinnings of Europe’s Financial Crisis

Liberalization, Integration, and Asymmetric State Power

Nina Eichacker

This book analyzes how financial liberalization affected the development of the financial crisis in Europe, with particular attention given to the ways in which power asymmetries within Western Europe facilitated financial liberalization and distributed the costs and gains from it. The author combines institutional narrative analysis with empirical surveys and econometrics, as well as country-level studies of financial liberalization and its consequences before and after the 2008 Global Financial Crisis.
Show Summary Details
This content is available to you

Index

Liberalization, Integration, and Asymmetric State Power

Nina Eichacker

Abdelal, R. 10, 812
Abiad, A. 13, 46, 48, 56, 61
agriculture 71, 76, 107
Ahern, Bertie 114, 123
Allen, F. 46
Alternative für Deutschland 124
Anglo Irish Bank 110, 114
Arteta, C. 44
asset bubbles 37, 104, 111, 123
asset-backed securities (ABSs) 36
austerity measures 23, 14, 97, 100, 113, 11619, 13031
Austria 7071, 94
financial liberalization and the onset of crisis 40, 45, 578, 60, 64
and trends in European finance 22, 246, 28, 31
‘bail-in’ policies 127
bailouts 2, 4, 7, 26, 68, 81, 99101, 104, 113, 11719, 122, 125
Baldwin, R. 43
Bank for International Settlements (BIS) 2022, 47, 62, 82, 94, 1278
Bank of England 8
Bank of Ireland 110
barriers to entry see entry barriers
Basel III 1012, 128
BayernLB 97
Belgium 12, 72, 74, 95
financial liberalization and the onset of crisis 40, 42, 45, 567, 60
post-WW2 banking systems 811
and trends in European finance 226, 28, 31, 36
Berger, A. 14
Berlusconi, Silvio 123
Bhagwati, Jagdish 2
Bretton Woods 9, 12, 69, 72, 7982
Brexit 3, 124
building societies 8
Bundesbank 9, 12, 14, 92, 101, 117
capital account liberalization 82
capital control liberalization 13, 18, 467, 52, 545, 61, 63, 82
capital flight 223
capital flows 2, 5, 89, 11, 15, 224, 267, 47, 117, 125, 129
financial liberalization and the onset of crisis 3940, 423, 45, 479, 51, 53, 589, 62, 64
and German financialization 86, 94, 96, 100, 103
political economy of financial integration 74, 83
and trends in European finance 19, 224, 26, 28
capitalism 88
Celtic Tiger moments 106, 118
central banks 82, 102, 10910
Bank of England 8
Bundesbank 9, 12, 14, 92, 101, 117
European Central Bank 14, 30
and trends in European finance 19, 36
Centrist-Progressive Party 114
China 17, 87
Clancy, Paula 110
Cod Wars 118
Coelho, Pedro Passos 123
collaterized debt options (CDOs) 313, 35
commercial mortgage-backed securities (CMBSs) 313
Commerzbank 97
cooperative competition 9
corruption 45, 110
credit bubbles 2, 108
credit rating agencies 9091, 99, 126
Crotty, James 9, 18
Cyprus 127
debt as percentage of GDP 246
debt-to-equity ratios 8990, 95
Deeg, Richard 910
deflation 87
Delors, Jacques 10
Denmark 12, 94, 12931
financial liberalization and the onset of crisis 40, 45, 567
and Icelandic/Irish financial liberalization 11819
political economy of financial integration 70, 73, 75
post-WW2 banking systems 911
deposit insurance 45
deprivation rate 113
deregulation 25, 1011, 13, 756, 7980, 823, 92, 1057
and trends in European finance 17, 24, 36
Deutsche Bank 97, 123
Deutsche Postbank 97
dictatorships 10, 71, 73
Dillon, Kevin 110
Dornbusch, Rudi 80
Draghi, Mario 127
Dresdner Bank 97
Dyson, K. 81
econometric model of financial liberalization 4559
Economic and Monetary Union (EMU) 17, 1215, 23, 62, 82, 85, 12332
financial liberalization and the onset of crisis 3945, 4750, 545, 589, 62, 645
and German financialization 867, 90, 929, 1013
and Icelandic/Irish financial liberalization 105, 109, 111, 113, 11720
political economy of financial integration 6870, 727, 81, 834
and trends in European finance 1819, 24, 269, 34, 367
Eichengreen, B. 18, 44
Endres, Anthony 80
entry barriers 13, 467, 52, 545, 613
euro 49, 59, 94
Eurobarometer 756, 79
European Banking Authority (EBA) 123
European Central Bank 14, 30, 812, 92, 99102, 105, 11620, 1223, 1258, 131
European Commission 812, 99100, 105, 11617, 1223, 125, 131
European Council 127, 13031
European currency unit (ECU) 49
European Economic Area (EEA) 111
European Economic Community (EEC) 12
European Financial Stabilisation Mechanism (EFSM) 1012
European Monetary System (EMS) 12
European Parliament 128
European Stability Mechanism (ESM) 1012
European Systemic Risk Board 128
European Union 3, 67, 1112, 1415, 99100, 112, 1245
financial liberalization and the onset of crisis 39, 45, 47
and Icelandic/Irish financial liberalization 105, 11516, 11819
political economy of financial integration 78, 8083
and trends in European finance 30, 37
Eurostat Housing Price Index 26
eurozone 7, 13, 1718, 23, 39, 423, 467, 59, 71, 81, 83, 96, 989, 1023, 105, 115, 120, 123, 127, 131
eurozone crisis 13, 39, 68, 857, 97, 99, 1023, 127
see also sovereign debt crisis
exchange rates 48, 80, 120
Federal Agency for Financial Market Stabilisation (FMSA) 101
Federal Reserve 126
Fianna Fáil Party 110, 11516
financial innovation 4, 41, 56, 72, 102, 123, 131
financial integration 13, 22, 43, 59, 99100, 1245
see also political
economy of financial integration
financial liberalization 13, 57, 3940, 77, 1246
econometric literature review 445
econometric model 4559
empirical trends 424
and German financialization 85, 924, 97, 103
and Icelandic/Irish financial liberalization 104, 1067, 119
institutional background 412
political economy of financial integration 6876, 7883
post-EMU changes 1215
pre-EMU changes 811
and trends in European finance 1718, 23, 26, 367
Financial Market Stabilisation Fund (SoFFin) 101
financial policy 23
Financial Services Action Plan (FSAP) 13
Financial Stability Forum 111
Fine Gael Party 11516
Finland 9, 15, 73, 12831
financial liberalization and the onset of crisis 40, 57, 60
and trends in European finance 25, 28, 31
Five Star 124
foreign direct investment (FDI) 5, 248
France 4, 12, 14, 934, 99, 1223
financial liberalization and the onset of crisis 4042, 45, 567, 60
and Icelandic/Irish financial liberalization 113, 117, 120
political economy of financial integration 6974, 76, 78, 812, 84
post-WW2 banking systems 911
and trends in European finance 226, 28, 31, 36
Frankel, J.A. 43
G-7 107
Gentiloni, Paolo 123
Germany 34, 6, 12, 14, 857, 103, 1224, 126, 130, 132
central bank 9, 12, 14, 92, 101, 117
changes in domestic financial policy 8792
and European-level changes 936
financial liberalization and the onset of crisis 3943, 45, 57, 60, 64
and Icelandic/Irish financial liberalization 113, 116, 120
Landesbanken8, 72, 8591, 968, 101, 103, 132
political economy of financial integration 6974, 76, 7882, 84
post-crisis changes in 96102
post-WW2 banking systems 810
Sparkassen87
and trends in European finance 17, 226, 28, 3031, 33, 367
universal banks 9, 14, 30, 72, 80, 87
Giner, Salvador 10
Glass-Steagall 8
Glick, R. 18
Glitnir 106
global financial crisis 17, 14, 1229, 131
financial liberalization and the onset of crisis 39, 426, 4850, 569, 612
and German financialization 857, 959, 1013
and Icelandic/Irish financial liberalization 1045, 112, 117, 11920
political economy of financial integration 68, 72, 834
responses to 367
and trends in European finance 1819, 223, 26, 28, 30, 33
globalization 5, 45, 689, 7980, 923, 105, 126, 1312
gold standard 79
Golden Dawn 124
Goldman Sachs 113
Greece 34, 13, 15, 118, 1224, 127
financial liberalization and the onset of crisis 4042, 45, 567, 60, 64
and German financialization 94, 97, 99
political economy of financial integration 71, 73, 76, 812
post-WW2 banking systems 911
and trends in European finance 1920, 236, 28, 31
Greenwood, J. 78
gross domestic product 62, 12930
financial liberalization and the onset of crisis 3940, 424, 468, 5051, 535, 589, 627
and German financialization 946, 99, 102
and Icelandic/Irish financial liberalization 104, 106, 11112, 11517
political economy of financial integration 74, 78
and trends in European finance 19, 21, 24, 26, 28, 3035
group competition 911
Haarde, Geir 114
Hale, G. 43
Halvorsen, Kristin 129
Hobza, A. 43
Hollande, François 123
Hopkins, T. 70
housing bubbles 2, 4, 24, 26, 68, 74, 82, 108, 11011, 120, 130
HSH Nordbank 97
HypoBank 97
Iceland 4, 6, 36, 84, 86, 1045, 11820, 122, 126, 12931
financial liberalization and the onset of crisis 40, 43, 45, 567, 64
historical background to financial liberalization 10512
post-crisis developments in 11218
IceSave 113
IKB Deutsche Industriebank AG 97
IMF 30
Independence Party 114, 116
inequality 5, 1011, 83
inflation 14, 7981
Ingram, Philip 111
interest groups 5, 758, 84, 125, 131
interest rates 2, 5, 8, 13, 40, 479, 545, 57, 613, 656, 86, 120, 126
and trends in European finance 1718, 23
International Monetary Fund 82, 88, 97, 99100, 105, 1078, 11620, 1223, 1256, 131
Ireland 4, 6, 15, 1045, 11820, 1223, 126
and the EMU 13
financial liberalization and the onset of crisis 4043, 45, 567, 60, 64
and German financialization 86, 945, 97, 99
historical background to financial liberalization 10512
political economy of financial integration 714, 812, 84
post-crisis developments in 11218
post-WW2 banking systems 911
and trends in European finance 1920, 226, 28, 3031, 33, 36
Irish Life & Permanent 110
Italy 4, 97, 1234
and the EMU 13
financial liberalization and the onset of crisis 4042, 45, 57, 60
and German financialization 934
political economy of financial integration 7072, 76
post-WW2 banking systems 911
and trends in European finance 1920, 226, 28, 31, 36
Japan 77, 81, 94
Johnson, Simon 11314
Kaupthing 106
Kenny, Enda 116, 123
Kindleberger, Charles 4
Labour Party, Ireland 110, 115
Laeven, L. 456, 61
Landesbanken8, 72, 8591, 968, 101, 103, 132
Landsbanki 106, 113
Lane, P.R. 100
LB Baden-Württemberg 97
Left-Green Movement 114
Lehman Brothers 109
leverage 1820, 26, 8990
Levine, Ross 2
Lewis, Michael 41, 74, 111, 113, 118
liquidity 42, 46, 95, 102, 110, 1278
Lloyds 114
Luxembourg 723
Maastricht Treaty 5, 1213, 41, 64, 72, 86, 93, 1245
Stability and Growth Pact 99
Macron, Emmanuel 123
manufacturing 107
McCann, Dermot 12
Mendoza, E.G. 18
Merkel, Angela 3
Merrill Lynch 11011
Mingasson, Jean-Paul 812
Mishkin, Frederic 2, 110
Mitterrand, François 10, 73, 93
monetarism 80
monetary and financial institutions (MFIs) 91, 103
Monti, Mario 123
moral hazard 81, 132
Mügge, Daniel 78
National Asset Management Agency (NAMA) 11415
nationalization 5, 9
neoclassical theories 5
neoliberal theories 5, 7983, 105, 111
neomercantilism 85
Netherlands 4, 12, 14
financial liberalization and the onset of crisis 3942, 45, 57, 60
and Icelandic/Irish financial liberalization 11316, 118, 120
political economy of financial integration 7074, 76, 78, 82
post-WW2 banking systems 810
and trends in European finance 226, 28, 3031, 33, 36
New Classical theories 80, 82
Norway 12, 94, 118, 126, 12831
financial liberalization and the onset of crisis 40, 45, 578
political economy of financial integration 70, 73, 75
post-WW2 banking systems 911
Obstfeld, M. 43
O’Connor, Nat 110
Octopus 105
Oddsson, Davið 1056, 10910
Organisation for Economic Co-operation and Development (OECD) 3, 45, 47, 62, 89, 104, 108, 122
pension funds 4, 19
Podemos 123
political economy of financial integration 6870, 834, 105
changes in German domestic financial policy 8792
neoliberal theoretical paradigm shift 7983
power axes 7078
Portes, Richard 110
Portugal 4, 15, 118, 1223
financial liberalization and the onset of crisis 4043, 45, 578, 60, 64
and German financialization 947, 99
political economy of financial integration 714, 812
post-WW2 banking systems 911
and trends in European finance 1920, 226, 28, 31, 36
poverty risk 113
power asymmetries 4, 68, 80, 83, 1256, 1312
power axes 7078
Prasad, E. 44
Prast, H. 10
privatization 23, 710, 13, 41, 68, 73, 80, 106, 119
property prices 5, 15, 26, 28, 37, 130
see also housing bubbles
Puri, M. 98
Reagan, Ronald 82, 105
real estate prices see property prices
recapitalization 99101, 11516, 127, 129
refugees 3
Reinhart, C. 18, 61
Renzi, Matteo 123
reregulation 5
residential mortgage-backed securities (RMBSs) 312
Rodrik, Dani 18
Rogoff, K. 18, 61
Rose, A. 18, 43
Royal Bank of Scotland 114
SachsenLB 978
Sarkozy, Nicolas 123
savings and loans institutions 8
Schmitz, B. 43
Second Banking Coordination Directive (SBCD) 1314, 412, 93
securitization 3, 28, 30, 334, 367, 412, 8990, 92, 95, 103, 128, 131
security market liberalization 467, 5056, 58, 61
Sigurðardóttir, Jóhanna 114
Sigurgeirsdóttir, S. 10910
Single European Act (SEA) 77
Single Market 34, 69, 724, 76, 83
and trends in European finance 224
Single Market Passport 13, 30, 34, 41, 6970, 72, 74, 86, 93
Single Supervisory Mechanism (SSM) 1012
Slovik, P. 102
small and medium-sized enterprises (SMEs) 88
Snake system 12
Social Democratic Alliance 114
socialization 5
Sócrates, José 123
soup kitchens 118
sovereign debt 1718, 46, 86, 956, 100, 11213, 117
sovereign debt crisis 1, 3, 6, 13, 18, 23, 37, 40, 43, 59, 103, 1223, 127
see also eurozone crisis
Spain 4, 15, 118, 1223, 127
and the EMU 1213
financial liberalization and the onset of crisis 4043, 45, 578, 60
and German financialization 945, 97
political economy of financial integration 71, 734, 812
post-WW2 banking systems 911
and trends in European finance 1920, 226, 28, 3033, 36
Sparkassen87
special purpose vehicles (SPVs) 36
Statistics Ireland 10910
Stiglitz, Joseph 2
Story, J. 12
structured investments vehicles (SIVs) 36, 90
subprime mortgage crisis 1, 45
subprime mortgage crisis 40, 86, 95, 97, 103, 1256
Sweden 12, 94, 118, 126, 12830
financial liberalization and the onset of crisis 40, 45, 57
political economy of financial integration 70, 73, 75
post-WW2 banking systems 911
Switzerland 22, 40, 45, 57, 109
Syriza 124
TARGET2 system 117
Thatcher, Margaret 71, 82, 105
Tobin, James 80
Torrones, M.E. 18
trends in European finance 1718, 424
empirical trends 1936, 424
historical trends 1819
responses to the crisis 367
unemployment 1, 86, 11213, 117, 122
United Kingdom 34, 14, 22, 124
central bank 8
and the EMU 12
financial liberalization and the onset of crisis 40, 45, 57
and German financialization 90, 94
and Icelandic/Irish financial liberalization 11216, 118, 120
political economy of financial integration 7071, 735, 84
post-WW2 banking systems 810
United States 34, 89, 30, 40, 42, 60, 72, 767, 79, 812, 87, 90, 935, 105, 117, 120, 131
see also subprime mortgage crisis
universal banking 9, 14, 30, 467, 62, 72, 80, 87, 124
Valencia, F. 456, 61
van Lelyveld, I. 10
von Hagen, J. 43
Voth, Hans 9
Wade, R. 10910
Wallerstein, I. 70
Walter, I. 12
Waysand, C. 43
welfare spending 17, 117
West LB AG 97
Zapatero, José Luis Rodríguez 123
Zeugner, S. 43