The Global Financial Crisis (GFC) is seen as arising from a new social structure of accumulation that institutionalised a neoliberal form of capitalism post the 1980s. This gave rise to “financialization,” which has increased both the power of financial markets over other economic sectors, and of financial market actors over national governments. However, while the neoliberal ideology underpinning financialization had a global impact, it sprang from the leading free market economies of the US and UK and was most readily embraced by states sharing their institutional support for it, such as Australia and Canada. But to what extent has it been questioned in these states since the crisis? In this article we examine perceptions of the legitimacy of finance via a 6 year comparative study of editorials in the mainstream press over 2007–2012. We do so because shifts in perceptions of the legitimacy suggest the extent to which the GFC produced the potential for more fundamental institutional change. We find that rather than this legitimacy having been undermined, or transformed, existing viewpoints instead hardened over the period considered. This indicates that, despite regulatory reform, the power of finance remains relatively unchanged.

This paper explores the contribution of national institutions to the competitive transformation of big commercial banks in late industrializing countries through the analysis of the Spanish case. The paper uses a comparative historical analysis to establish that strategic coordination between the state and large banks is a structural feature of the banking sector but may be articulated differently depending on the balance of power between states, banks and industry, the preferences of these actors, and their resources. Using evidence from Spain since the late 1970s, the paper argues that in this country, state-bank coordination was articulated as a non-hierarchical system of negotiated interactions and mutual exchanges of benefits between small groups of decision-makers at the government, the central bank, and big banks. Under the Spanish model, large banks contributed to the fulfillment of public policy objectives to develop the central bank's capacity to conduct monetary policy, strengthen supervision of the banking system, and modernize the financial sector. In exchange, big banks benefited from a favorable regulation that enabled them to restructure, consolidate the leadership of a new generation of bankers, and reach the efficiency frontier of their industry. The paper contributes to the literature of institutionalism by questioning the traditional dichotomy between market and strategic coordination. It also contributes to the literature of competitiveness by stimulating debate about the role of the state in supporting the transformation of big business.

This article explores market reactions to regulations that addressed the link between armed conflict and the diamond industry. The results show that several regulatory actions taken by the United Nations and the United States in the early 2000s corresponded with lower stock returns for diamond mining companies. Such effects are inconsistent with predictions made by some critics of the Kimberley Process Certification Scheme. On the other hand, stock returns for jewelry companies were abnormally negative for events that hurt the reputation of conflict-free production and trade regimes. The expansion of legal diamond markets also coincided with abnormally positive returns for jewelry companies, while new restrictions on market access coincided with abnormally negative returns. The results suggest that i) diamond trade regulations affected businesses in important and measurable ways, and ii) that similar regulations may have broader applicability in related industries.

We study how rich shareholders use their political influence to deregulate firms that they own, thus skewing the income distribution towards themselves. Individuals differ in productivity and choose how much labor to supply. High productivity individuals also own shares in the productive sector and thus earn capital income. All individuals vote over a linear tax rate on (labor and capital) income whose proceeds are redistributed lump sum. Shareholders also lobby in order to ease the price cap imposed on the private firm. We first solve analytically for the Kantian equilibrium of this lobbying game together with the majority voting equilibrium over the tax rate. We then proceed to a comparative statics analysis of the model with the help of numerical simulations. We obtain that, as the capital income distribution becomes more concentrated among the top productivity individuals, increased lobbying effort generates efficiency as well as equity costs, with lower labor supply and lower average utility levels in society.