Public Banks in the Age of Financialization
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Public Banks in the Age of Financialization

A Comparative Perspective

Edited by Christoph Scherrer

This book asks the important question of whether public banks are a better alternative to profit-seeking private banks. Do public banks provide finance for development? Do they serve as stability anchors in financial markets? What kind of governance keeps public banks accountable to the public? Theoretically the book draws on the works of Minsky for the question on stability and on interpretative policy analysis for the issue of governance. It compares empirically three countries with significant public banks: Brazil, Germany, and India.
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Chapter 2: Back to the future of alternative banks and patient capital

Kurt Mettenheim and Olivier Butzbach


The authors explore the genesis of alternatives to private banks, that is, savings banks, cooperative banks and development banks in the nineteenth century. They interpret the establishment of alternative banks as social reactions of self-defense in Karl Polanyi’s sense. The strengths of these alternative banks are rooted in what they call patient capital. Financial investments can be called patient when they are not made in expectation of short-term profits but in anticipation of more sustainable returns over time toward social missions or public policy. Patient capital provides alternative banks with competitive advantages for which the authors provide evidence from statistical analysis and comparison of bank balance sheets in historical data and standard measures of bank performance using bankscope data on bank balance sheets from 2006 to 2012. The success of alternative banks in recent years allows them to argue that although reforms have marginalized alternative banks in liberal market economies, liberalization produced back-to-the-future modernization of patient capital practices at alternative banks in coordinated market economies and emerging and developing nations.

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