عقب نشینی بزرگ: سیاست های توسعه مالی در قرن بیستم

The state of development of the financial sector does not change monotonically over time. In particular, by most measures, countries were more financially developed in 1913 than in 1980 and only recently have they surpassed their 1913 levels. To explain these changes, we propose an interest group theory of financial development where incumbents oppose financial development because it breeds competition. The theory predicts that incumbents’ opposition will be weaker when an economy allows both cross-border trade and capital flows. This theory can go some way in accounting for the cross-country differences in, and the time-series variation of, financial development.

There is a growing body of evidence indicating that the development of a country's financial sector greatly facilitates its economic growth (e.g., Demirguc-Kunt and Maksimovic, 1998; King and Levine, 1993; Jayaratne and Strahan, 1996; Rajan and Zingales, 1998a). Why then do so many countries still have underdeveloped financial sectors? The simple answer, and one favored by many economists, is the absence of demand. Certainly demand is a prime driver of financial development, but it cannot be the only explanation. Demand (as proxied for by level of industrialization or economic development) cannot explain why countries at similar levels of economic development differ so much in the level of their financial development. For instance, why was France's stock market much bigger as a fraction of its gross domestic product (GDP) than markets in the United States in 1913, even though the per capita GDP in the United States was not any lower than France's? It is hard to imagine that the demand for financing in the United States at that time was inadequate. At the time, the demand for more, and cheaper, credit was a recurrent theme in political debates in the United States, and it was among the most industrialized countries in the world even then.

We see four contributions of this work. The first is to show the reversal in financial markets, a finding inconsistent with pure structural theories of financial market development. The second is to add a new fact, which is that trade openness is correlated with financial market development, especially when cross-border capital flows are free. The third is to argue that these findings are consistent with interest group politics being an important factor in financial development across countries. The last is to suggest that a county's institutions might slow or speed-up interest group activities. This might indicate that institutions matter, though the way they matter might primarily be in tempering interest group activities.