1. The Political Economy of Financial Reforms During Hard Times:Banking Reforms in Developing Countries During the 1990s.
- Author
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Aguilera, Gabriel
- Subjects
- *
ECONOMIC reform , *FINANCIAL crises , *BANKING industry , *ECONOMICS ,DEVELOPING countries - Abstract
This paper analyzes the politics of banking reform in developing countries during the 1990s. Electoral competition helps to explain whether countries were likely to implement regulatory reforms after banking crises. The potential for wide swings in electoral support in highly competitive democracies should favor consumers, who benefit from reforms, and harm vested producer groups that prefer forbearance. Where electoral competition is muted, producer groups - such as a bankers' coalition - should benefit more than consumers given their economic and political power. To evaluate these arguments, this paper examines patterns of post-crisis regulatory reform implementation in Mexico, Venezuela, and South Korea during the 1990s. Within and cross-country evidence is consistent with the arguments. Surprisingly, it indicates that in countries with low levels of intra-party electoral competition, i.e. those with disciplined political parties, governments engaged in regulatory forbearance even with fierce inter-party competition. Crony financial capitalism seems less likely in multiparty settings with undisciplined parties. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]
- Published
- 2007