From Banks to Markets: The Politics of Changing Financial Architectures in Malaysia and Taiwan.

In recent decades the financial market structure in Malaysia and Taiwan has undergone a dramatic shift away from a bank-based system towards a capital market-oriented one. These trends were well underway prior to the Asian financial crisis of the late 1990s but they were consolidated and accelerated by that event and its aftermath. Capital markets have played such a dominant role in transferring funds and mobilizing industrial financing in the two economies that their overall financial structures have now become more market-oriented than those in the UK and the US. Challenging both the hyper-globalization and the neo-statist theses, this article contends that the growing market-orientation of the Malaysian and Taiwanese financial architectures reflects neither the inevitable process of convergence on neo-liberal practices nor the helping hands of the developmental state. It attempts to advance an institutional explanation that locates the political sources of financial market changes within the national configuration of interest and policy alliances between state economic agencies and private financial communities. Such alliances, which create policy and regulatory environments conducive to the development of capital markets, have exerted shaping influence over the market-oriented transformation of the financial system in Malaysia and Taiwan. This research fills in an important analytical gap in the existing literature that tends to pay scant attention to divergent institutional responses, particularly in the area of financial sector governance, to the constraining effects of global capitalism in developing and emerging market economies. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]