Ideology or Economics: Government Banking in New Zealand
28 Pages Posted: 1 Jun 2010 Last revised: 14 Oct 2010
Date Written: October 12, 2010
We argue that in the short history of New Zealand banking, political experimentation, based at first upon socialist ideology of the 1940’s led to the nationalisation of The Bank of New Zealand (BNZ), followed by a period of neo-liberalism in the 1980’s and early 1990’s in which the bank was privatised. We further argue that the establishment of Kiwibank Ltd (Kiwibank) in New Zealand at the dawn of the 21st Century was a return to the political ideology of the 1940’s. In this article we discuss the nationalisation and subsequent privatisation of the BNZ and draw a parallel between the perceived banking environment as it existed in New Zealand in the 20th Century and as it existed at the establishment of Kiwibank. By way of context setting we also discuss the political environment as it relates to the nationalisation of the Bank of England. We find that in New Zealand political experimentation, not commercial pragmatism was the underlying motivating factor for the state’s involvement in banking. The article contributes to the pool of knowledge regarding the political motivations behind nationalisation and state ownership of banking assets. The article is of interest to economic and political historians as well as those who study New Zealand political party history. Future policy makers could do well to reflect upon the motivations for state ownership of banking assets by asking if their decisions are driven by ideology or economics.
Keywords: Banking, Privatization, Nationalization
JEL Classification: E44, E50, E65
Suggested Citation: Suggested Citation