Banks’ Structural Power and States’ Choices Over What Structurally Matters. The Geo-Economic Foundations of State Priority Towards Banking in France, Germany and Spain

46 Pages Posted: 11 Jan 2022

See all articles by Elsa Massoc

Elsa Massoc

Goethe University Frankfurt - Center for Advanced Studies - Foundations of Law & Finance (LawFin)

Date Written: November 15, 2021

Abstract

Since the 2008 financial crisis, European largest banks’ size and business models have largely remained unchallenged. Is that because of banks’ continued structural power over States? This paper challenges the view that States are sheer hostages of banks’ capacity to provide credit to the real economy – which is the conventional definition of structural power. Instead, it sheds light on the geo-economic dimension of banks’ power: key public officials conceive the position of “their own” market-based banks in global financial markets as a crucial dimension of State power. State priority towards banking thus result from political choices over what structurally matters the most for the State. Based on a discourse analysis of parliamentary debates in France, Germany and Spain between 2010 and 2020 as well as on a comparative analysis of the implementation of a special tax on banks in the early 2010s, this paper shows that State’s Finance ministries tend to prioritize geo-economic considerations over credit to firms. By contrast, Parliaments tend to prioritize investment. Power dynamics within the State thus largely shape political priorities towards banking at the domestic and international levels.

Keywords: structural power, States, banks, geo-economics, institutions

Suggested Citation

Massoc, Elsa, Banks’ Structural Power and States’ Choices Over What Structurally Matters. The Geo-Economic Foundations of State Priority Towards Banking in France, Germany and Spain (November 15, 2021). LawFin Working Paper No. 26, Available at SSRN: https://ssrn.com/abstract=4006168 or http://dx.doi.org/10.2139/ssrn.4006168

Elsa Massoc (Contact Author)

Goethe University Frankfurt - Center for Advanced Studies - Foundations of Law & Finance (LawFin) ( email )

Theodor-W.-Adorno-Platz 3
60629 Frankfurt am Main
Germany

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