Extroverted financialization: how US finance shapes European banking

Beck, Mareike

doi:10.1080/09692290.2021.1949375

Cited by 12 publications

(8 citation statements)

References 69 publications

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“…The reasons behind the establishment and implementation of specific capital ratio requirements (or banking regulation in general) deserve discussions that go well beyond the scope of this review. However, the factors behind the development of large market‐based banks has more to do with considerations of state and banking actors to promote the global competitiveness of their national market‐based banks than with having them fulfilling a functional role defined by their typical variety of capitalism or growth models (Beck, 2021; Massoc, 2020, 2022b).…”

Section: The International Political Economy Of Bank and Credit Regimesmentioning

confidence: 99%

Indebted societies credit and welfare in rich democracies. By AndreasWiedemann, Cambridge University Press

Massoc

2023

Governance

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not contextualizing health insurance in other forms of social protection, Huang misses an opportunity to broaden her argument's impact on other bodies of literature such as the productionist welfare state. But this minor criticism does not undermine the fundamental contribution a focused analysis of the health insurance system provides.Social Protection under Authoritarianism is an empirically rich deep dive into China's social health insurance program, its complexities, determinants, and outcomes for inequality. It is a welcome addition to the study of authoritarian redistribution and the growing literature on authoritarian welfare systems. Andreas Wiedemann's Indebted Societies has received praises and awards since it was first published in 2021. This review won't challenge this well-deserved reception of the book. Wiedemann's book is indeed an amazing contribution to two essential areas of study in Comparative Political Economy (CPE): welfare states and credit markets. Wiedemann convincingly argues that these two areas -which are often analyzed separately, are actually deeply intertwined. The book examines whether people go into debt (or not), which people go into debt and for what reasons they do so across and within political economies. The answers to these questions largely depend on the extent to which social policies cover the income fluctuations to which people are increasingly exposed over their life course. However, this is only one part of the story. They also depend on the very possibility of individuals to borrow. Characteristics of the welfare state thus act in conjunction with characteristics of the national credit regime to shape if and how people go into debt.When the welfare state is weak, and access to credit is easy, like in the US, private indebtedness largely substitutes itself to social policies. This means that (especially low and middle income) people borrow to make ends meet in case they get laid off or when they get sick. When the welfare state remains relatively strong, and access to credit is also easy, like in Denmark, private indebtedness mostly complements social investments. This means that (especially high income) people borrow to invest in social opportunities (e.g., taking time off work for training purposes). Whatever the characteristics of the welfare state, when access to credit is difficult, people simply can't borrow. Even when some segments of the population would have incentives to borrow to mitigate the effects of the welfare state's retrenchment, like in Germany, they have no capacity to do so and levels of private indebtedness remain low.

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Section: The International Political Economy Of Bank and Credit Regimesmentioning

confidence: 99%

Indebted societies credit and welfare in rich democracies. By AndreasWiedemann, Cambridge University Press

Massoc

2023

Governance

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“…However, in what was arguably the most important development in global banking over the past half century, banks also developed ways of funding themselves via short-term borrowing (Hardie et al, 2013;Knafo, 2022). By borrowing against collateral in the short-term money market, banks could increase the size of their balance sheets far above what was possible with only traditional deposit funding (Fernandez and Wigger, 2016;Gabor, 2016;Sgambati, 2019, Beck, 2021. The remainder of this category includes all non-bank financial institutions, notably asset owners such as pension funds and insurers, as well as the various types of asset managers (providers of mutual and exchange-traded funds, hedge funds, private equity funds, and venture capital funds).…”

Section: Sharesmentioning

confidence: 99%

The three phases of financial power: Leverage, infrastructure, and enforcement

Braun¹,

Koddenbrock²

2022

Preprint

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How does global capitalism – a highly unstable system that creates vast inequalities – continue to reproduce itself? Despite the burgeoning literature on financialization, large gaps remain in our understanding of the profitability and concentration of the financial sector, and of its ability to reassert itself after financial crises. This chapter develops a framework for the analysis of the political economy of global finance that centers on the claim relation between creditors and debtors. It foregrounds creation, trading, and enforcement as key stages in the life-cycle of financial claims. At each stage, the conflict between creditors and debtors takes different forms as both sides seek to manipulate the claim relationship to their advantage. However, the two sides in this tussle are not equal. We introduce the concepts of leverage power, infrastructural power and enforcement power as analytical tools to study the inequalities and hierarchies embedded in, and reproduced via, credit-debt relationships in contemporary global financial capitalism.

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“…How do we account for this transformation in banking? The value of EF is that, to frame the process of internationalization, it foregrounds four key features arising from USD wholesale markets (Beck, 2021). These imperatives and constraints help to explain why this process took on US characteristics rather than other forms, and why Deutsche Bank abandoned its powerful position for the uncertainties of new financial relations:…”

Section: Efmentioning

confidence: 99%

“…I will use the concept of EF that I have developed in more detail elsewhere (Beck, 2021) to analyse how a conglomerate transforms its traditional business model to meet the requirements of US-led financialization. EF aims to capture the problems faced by agents attempting to integrate financial practices developed for a different context.…”

Section: Introductionmentioning

confidence: 99%

The managerial contradictions of extroverted financialization: the rise and fall of Deutsche Bank

Beck

2022

Socio-Economic Review

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Deutsche Bank was once an acclaimed US-style investment bank but is now struggling. The rise of US finance is often explained as an outcome of financial liberalization that motivated other banks to abandon their traditional industrial support to chase profit opportunities within global securities markets. This story, however, underestimates how the transition to US-led financialization was deeply entangled with managerial struggles and the contradictions of adopting US financial innovations from a peripheral position. By contrast, I use the concept of extroverted financialization to portray Deutsche Bank’s transformation as an outcome of its attempts to integrate new funding practices connected to US money markets, called liability management. I argue that this process generated a difficult-to-manage business model and, ultimately, Deutsche’s decline. Because of these extroverted strategies, the bank is now caught between opposing logics of banking, within neither of which it can regain its previous powerful position.

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Extroverted financialization: how US finance shapes European banking

Cited by 12 publications

References 69 publications

Indebted societies credit and welfare in rich democracies. By AndreasWiedemann, Cambridge University Press

Indebted societies credit and welfare in rich democracies. By AndreasWiedemann, Cambridge University Press

The three phases of financial power: Leverage, infrastructure, and enforcement

The managerial contradictions of extroverted financialization: the rise and fall of Deutsche Bank

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