Non-market cooperation and the variety of finance capitalism in advanced democracies

In this article I explore empirically the determinants of the persistent cross-national variation in finance capitalism in advanced democracies. I find that the degree of strategic coordination through extra-market institutions – which protect the economic system from class and sectoral pressures and promote collaboration among state agencies, financiers, managers, and labor organizations – contributes to a country's domestic banking and financial intermediary-based development but is less conducive to the development of its securities markets. The financial liberalization reforms of the 1990s meant the emergence of an asymmetric corporatist system, whereby banks and other financial institutions played a crucial role in defining the new rules of financial governance. Conducting a panel data analysis encompassing 18 advanced democracies over the period of 1960–2005, I find evidence of the impact of strategic coordination on financial development, while controlling for alternative explanations and ensuring that my estimates capture the influence of the exogenous component of coordination. The paper shows that convergence to the Anglo-Saxon model of finance has not occurred.