The great reversals: the politics of financial development in the twentieth century

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 th...

Full description

Saved in:
Bibliographic Details
Published inJournal of financial economics Vol. 69; no. 1; pp. 5 - 50
Main Authors Rajan, Raghuram G, Zingales, Luigi
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.07.2003
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Financial Economics
Subjects
Capital flow
Capital flows
Capital market
Economic growth
Economic history
Economics
Finance
Financial development
Financial economics
Financial markets
Financial services
Foreign investment
Growth
Growth theory
International trade
Politics
Reversals
Theory
Trade
Trade theory
G180
Financial markets
G380
P000
Growth
Capital flows
G200
G100
Trade
Reversals
Financial development
O160
Politics
Online AccessGet full text

Cover

More Information
Summary: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.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-405X
1879-2774
DOI:10.1016/S0304-405X(03)00125-9