Financialisation through Microfinance: Civil Society and Market-Building in India

Abstract

Microfinance does not reduce poverty, but it does successfully construct economic relations between owners of capital and borrowers of capital, allowing surpluses to accumulate through finance. It does so by drawing on the agency of financialised civil society actors who facilitate financialisation by working around the state to build new markets in finance and other goods. This article understands financialisation as the expansion of the frontier of financial accumulation. Microfinance is shown to achieve this expansion by establishing credit-based linkages between owners and borrowers of capital, allowing surplus accumulation to take place via the credit relation. Underlying this material relationship, there is also a level at which financialisation motivates and pressures civil society actors to bring microfinance to the poor. By becoming financialised agents themselves, civil society organisations act as conduits for an expansion of financial markets and the construction of new market relations for other goods. A case study of microfinance for water and sanitation in India shows in detail how this construction of markets via civil society works in practice, highlighting the pressures and opportunities presented by microfinance as a vehicle for building markets.     

Financialization and Global Commodity Chains: Distributional Implications for Cotton in Sub‐Saharan Africa

Restructuring of global and local markets has led to an increased influence of commodity derivatives markets on commodity price setting. This has critical implications for price risks experienced by actors along commodity chains. Commodity derivatives markets have undergone significant changes that have been referred to as the ‘financialization of commodities’, which we define as an increase in trading activity by financial investors and the reorientation of business strategies by commodity trading houses towards risk management and financial activities. This article assesses how these global financialization processes affect commodity producers in low‐income countries via the operational dynamics of global commodity chains and national market structures. It investigates how prices are set and transmitted and how risks are distributed and managed in the cotton sectors in Burkina Faso, Mozambique and Tanzania. It concludes that uneven exposure to price instability and access to price risk management have important distributional implications. Whilst international traders have the capacity to deal with price risks through hedging, in addition to expanding their profit possibilities through financial activities on derivatives markets, local actors in producing countries face the challenge of increased short‐termism — albeit to different extents depending on national market structures — with limited access to risk management.     

Politics,Society and Financial Liberalization: Turkey in the 1990s

This article focuses on the political economy of Turkey in the 1990s to illustrate the importance of analysing economic variables that intersect with the quality of political democracy. In 1989, the debt‐ridden state moved to systematically and completely deregulate Turkey’s financial markets. Together with the ongoing processes of liberalizing commodity markets and integrating with global capital markets, financial liberalization was expected to achieve fiscal and monetary stability, stimulate business confidence to invest in productive sectors, produce stable growth, encourage privatization and control inflation. However, the new hegemony of the capital markets has gone hand‐in‐hand with deteriorating macroeconomic performance, a worsening income distribution, the discrediting of politics and its isolation from society. The authors examine several key dynamics which are helping to legitimate the neoliberal agenda of the 1990s. These include the distribution of state largesse to manipulate electoral capitalism; the rise of an informal sector in the ‘Anatolian Tigers’; promotion of the seductive attractions of the market; and an antipolitical reform populism adopted by political actors to exploit popular disillusionment with the political system.     

Access to capital markets and the geography of productivity leaders and laggards

This paper examines whether access to the capital market of convertible and nonconvertible bonds affects total factor productivity (TFP) for the population of Italian joint stock manufacturing companies, based in highly segmented local financial markets, between 2007 and 2017. The hypothesis, well grounded in the literature, is that long-term capital favors investment in intangibles and other risky assets necessary for productivity growth. To identify this effect, we exploit the exogenous shock of the Italian banking deregulation of the mid-1990s as an instrument for firm-level access to capital, interacted with distance from logistic networks. These reforms changed the distribution of the type of branches at the local level, increasing the share of joint stock banks, which have high connections to international capital markets. This geographical reallocation of banking activities ultimately affected firms' financial structure, favouring their access to capital, even when based in peripheral financial areas. Firms which issued instruments of market debt achieved higher levels of productivity and a higher probability to reach top percentiles of productivity distribution.     

CONTESTED GROWTH: THE DEVELOPMENT OF NORWAY'S TEMPORARY STAFFING INDUSTRY

In this article we mobilize a variegated capitalism approach to understand the development of the Norwegian temporary staffing industry. From this perspective, national temporary staffing industries are understood as contested multi‐actor and multi‐scalar institutional fields. The analysis explores the key actors and regulatory conditions that have interactively produced this field in the Norwegian context since initial deregulation in 2000, paying particular attention to the active role played by agencies and their collective organizations. In our account, the tight regulatory conditions for temporary staffing in Norway emerge as the main mobilizing issue for the agencies, as well as other political actors such as trade unions. It is argued that the nature of national labour laws, and struggles thereon, are defining characteristics which set the Norwegian market apart from the neighbouring Swedish staffing market. The Norwegian case enables us to contribute to the wider economic geography literature on temporary staffing markets by demonstrating the fundamental importance of national regulatory processes and the contested political processes that underlie regulatory change. It also demonstrates how national distinctiveness is actively produced in relation to extra‐national dynamics in terms of both regulatory imperatives (e.g. via the EU's Temporary Workers Directive) and processes of migration. Overall, we demonstrate how national staffing markets are highly dynamic, multi‐scalar institutional configurations whose particularities and complexities defy attempts to generalize across groups of seemingly “similar” national economies.     

Ecological Modernisation and the Governance of Carbon: A Critical Analysis

Abstract: In this paper, we use insights derived from a critical evaluation of ecological modernisation theories to examine the origins and influence of new, market‐based, forms of carbon governance. Focusing on two key examples—emissions trading in Europe and the global market in offsets—we argue that ecological modernisation theories can help us understand the processes through which the seemingly intractable problem of climate change has been reframed as an opportunity to construct a new carbon economy and anticipate some of the tensions, contradictions and limits of such an approach. We then explore the governance dimensions of these novel market mechanisms, look at how they work, and then discuss whether, to what extent and for whom they work. We highlight a series of (un)‐intended consequences that flow from these practices and modes of governing. We conclude by discussing the significance of these observations both for debates on climate change and the governance of carbon and for theories of ecological modernisation.     

The Informal Economy as a Site of Liquidity: Pakistan's Land Market

Based on extensive fieldwork, this article examines new informality in Pakistan's land market by which vacant plots of land are transacted informally between market actors in rapidly reversed short‐term holdings. The analysis pivots around the changing economic environment in Pakistan with the shift from heavy regulation of money and controlled pricing, to the liberalization of money and markets. The author explores how liquidity is taken up as a microeconomic strategy to protect against new financial risk in this environment, and how this is played out as a preference for informal transactions. These practices inform a case study that contributes to the established literature on the links between globalization and the informal economy by articulating a driver of growing informal transactions that is novel to the literature.     

Innovation and the Entrepreneurial State in Asia: Mechanisms of Bond Market Development

Abstract

Bond markets have expanded rapidly in emerging East Asian economies in recent years. Asian policymakers have played a pivotal role in this development. This process presents an interesting challenge to the developmental state literature associated with bank-based financial systems. We argue that it is best to understand the role of the state as an entrepreneurial state in the construction of these markets, focusing on institutional innovation in three mechanisms of state-led market infrastructure: national or local credit rating agencies, mortgage corporations and bond pricing agencies. National credit rating agencies rate the creditworthiness of debt in local currency. Mortgage corporations create markets in securitised housing loans. Bond pricing agencies put a value on illiquid debt instruments to enable mark-to-market portfolio management. Together, these three mechanisms constitute the core determinants of the market (demand for creditworthy products, supply of tradeable assets, and the fixing of a price to those assets). In so doing they influence the nature of market operations, producing outcomes very different from the free market ideal type. We also consider cross-country commonalities and variations in this general pattern.     

Setting the rules: private power,political underpinnings,and legitimacy in global monetary and financial governance

The role of private market agents in global monetary and financial governance has increased as globalization has proceeded. This shift in both markets and patterns of governance has often been encouraged by states themselves in pursuit of liberalization policies. Much of the literature views these developments in a positive light, yet there are other aspects of these developments that also merit attention. This article supports its central propositions with two cases of emerging global financial governance processes: the Basel II capital adequacy standards for international banking supervision and the International Organization of Securities Commissions‐based transnational regulatory processes underpinning the functioning of cross‐border securities markets. Based on the case findings, the article argues first that private sector self‐regulation and/or public‐private partnership in governance processes can leave public authorities vulnerable to dependence on the information and expertise provided by private agents in a fast‐moving market environment. Policy in the vital domain of financial regulation has been increasingly aligned to private sector preferences to a degree that should raise fears of bureaucratic capture. Second, the article contends that the overall outcome in terms of global financial system efficiency and stability has been mixed, bringing a range of important benefits but also instability and crisis for many societies to a degree that has led to challenges to global governance itself. The case material indicates that the input, output and accountability phases of legitimacy in global monetary and financial governance are highly problematic, and much of the problem relates to the way in which private market agents are integrated into the decision‐making process. Third, the article posits that a better consideration of these three ‘phases’ of legitimacy and their interrelationships is likely to enhance the political underpinnings and legitimacy of global financial and monetary order.     

The Politics of Carbon Market Design: Rethinking the Techno‐politics and Post‐politics of Climate Change

Carbon markets have provided fertile ground for research on the changing nature of political contestation. MacKenzie locates a “techno‐politics” of carbon markets that creates new possibilities for a “politics of market design”. In contrast, Swyngedouw argues carbon markets are part of a “post‐political” shift that narrows potential pathways through “depoliticisation”. This article engages with these debates by examining three recent attempts to reform the ailing European Union Emissions Trading System: restricting industrial gas offsets, backloading allowance auctions and the 2030 climate and energy package. It conceptualises the respective episodes as contests over the reach, force and priority of value determinations in climate policy, emphasising the contradictory imperatives facing states on each issue. The outcomes of contestation between industry groups and environmental organisations—real but limited reforms and a consolidation of the carbon market over alternatives—demonstrate the constraints facing technocratic campaigning and the ongoing politicisation of climate change.     

“All Gone Now”: The Material,Discursive and Political Erasure of Bank and Building Society Branches in Britain

Abstract: This paper examines an apparent anomaly that lies at the heart of processes of financial exclusion within Britain. Given that the branch networks of banks and building societies have shrunk in size by about one‐third since 1989, a period during which the Government has launched a wide‐ranging set of policies to tackle financial exclusion, why is it that the issue of branch closure has been neutralised as a political issue? After providing evidence to show the extent of branch closure in Britain and illustrating the ways in which geographical research in particular has drawn attention to the nature of this problem, we look at the way the issue of physical access to financial services has been discursively and politically marginalised. We undertake a detailed history of public policy in the area, and the ways in which research funded by industry bodies and Government departments has been used and framed to build a pro‐market, neoliberal policy programme that constructs branch closures as natural and inevitable.     

北京市集贸市场空间分布特征研究

集贸市场在我国已有悠久的历史,但目前对我国集贸市场空间分布的研究还较欠缺。本文在阐述集贸市场概况的基础上,对北京市集贸市场的分布状况进行空间现状分析和变迁比较。文章分两部分进行分析比较,其一是对集贸市场的总体进行分析比较,其二是单独选取成交额超亿元的集贸市场进行分析比较,并对个别集贸市场的区位优势和劣势进行了典型分析。在比较分析的基础上,初步得出北京市集贸市场分布的空间特征。     

Blockchain in the EU: Transforming imaginaries and the social making of fnancial regulation

Based on local and online ethnographic research, this article explores how blockchain projects and financial supervisors navigate transforming technological dispositions and interact in constructing regulatory frameworks. While there is a straightforward replacement of revolutionary blockchain narratives with regulatory compliance ones, there is also degree of codependency between regulators and market actors in regulatory negotiation.     

Russian nuclear energy diplomacy in Finland and Hungary

We compare Russian nuclear energy diplomacy toward Finland and Hungary, where the Russian state corporation Rosatom intends to build nuclear power plants by the 2020s. Russian nuclear energy diplomacy features Rosatom working with other state institutions, its own subsidiaries, and an extensive network of companies and R&D actors to support Russian nuclear power projects abroad. Using the structuration approach, we find three interests driving such diplomacy: energy business and associated profits; modernization of the Russian economy, including the diversification of its export structure; while foreign policy interests are also involved, considering the constraints emerging in EU–Russia energy diplomacy in the oil and gas sectors, including the sanctions since 2014. Some domestic actors in Finland and Hungary make the linkage between nuclear energy and foreign policy as explicit as do some Western commentators. Seeking to pursue these interests, Russian actors must accommodate their considerable assets to the structural constraints they encounter in the target countries. We identify four structural dimensions: the Russian actors are well endowed as regards the resources, technology, and infrastructure dimension; and the dimension of finance, business models, and markets. However, on the institutional dimension, they face a less controllable environment. Regarding the ecological dimension, they must conform to local safety requirements. In both cases, Russian actors were able to strengthen perceptions of joint interests with actors in the target country facilitating the nuclear power plant projects, thereby paving the way for the use of soft power.     

The Informal Financial Sector in Bangladesh: An Appraisal of its Role in Development

Informal financial markets in developing countries, and their role in the development process itself, form a relatively neglected area when it comes to research and policy planning. It seems, however, that this may be due to inaccurate perceptions of the value and effectiveness of this sector, and of its relationship to formal sector financial institutions. This paper uses data from an extensive research project on informal financial markets in Bangladesh to examine the size of the informal market, its relationship to the formal financial sector and the part it plays in the process of development. The paper concludes that, in all these aspects, the informal financial markets are more important, more efficient and more equitable than is generally supposed.     

Public policy,local labor demand,and migration in Sweden, 1979-84

"A model of private local labor demand and interjurisdictional migration is presented and estimated using data from Swedish counties and municipalities for 1979-84. Our goal is to compare the effects on local labor markets of distinctive public-sector programs with those of traditional market variables. We find that local income taxes and tax-equalization grants have important effects on local labor markets; regional development policy measures and geographical-mobility subsidies do not. Thus, recent efforts scaling back some of these programs may not materially alter the regional economy's performance. Wages and other traditional market variables are also often found to influence significantly local labor markets."     

Accounting for Temporal Demand Variations in Retail Location Models

This article develops and calibrates a spatial interaction model (SIM) incorporating additional temporal characteristics of consumer demand for the U.K. grocery market. SIMs have been routinely used by the retail sector for location modeling and revenue prediction and have a good record of success, especially in the supermarket/hypermarket sector. However, greater planning controls and a more competitive trading environment in recent years has forced retailers to look to new markets. This has meant a greater focus on the convenience market which creates new challenges for retail location models. In this article, we present a custom built SIM for the grocery market in West Yorkshire incorporating trading and consumer data provided by a major U.K. retailer. We show that this model works well for supermarkets and hypermarkets but poorly for convenience stores. We then build a series of new demand layers taking into account the spatial distributions of demand at the time of day that consumers are likely to use grocery stores. These new demand layers include workplace populations, university student populations and secondary school children. When these demand layers are added to the models, we see a very promising increase in the accuracy of the revenue forecasts.     

Flexibility or exploitation? Corporate social responsibility and the perils of universalization (Respond to this article at http://www.therai.org.uk/at/debate)

As anthropologists and other critics of capitalism turn their attention to the controversial and burgeoning corporate social responsibility (CSR) movement, most focus on conflicts in community relations and environmental degradation. Few scholars have examined equally pertinent questions of labor restructuring, even though these transformations emerged at about the same time as the rise of CSR. In this article, we draw on research in two Peruvian mining communities to explore the potential contradiction between the simultaneous mandate for corporations to present themselves as responsible employers, on the one hand, and the drive to rationalize labor and reduce financial responsibility for the workforce, on the other. We suggest that for both corporate officials and some scholars, this tension remains a latent one because CSR discourses and documents generalize corporate interests as the interests of mines as a whole.     

Public financial support and firm-specific characteristics: evidence from Portugal

This paper analyses the underlying factors explaining a firm’s use of public financial support and possible misalignments between policy goals and the characteristics of firms holding a public grant. Using firm-level data for a sample of Portuguese manufacturing firms over the 2006–2013 period, we investigate how public financial support at the firm level is related to observable firm’s characteristics. Our findings suggest that firms lacking resources, capabilities and international involvement seem to be those with great barriers to use public financial support. Therefore, it cast doubts on the efficiency of public financial support programmes aiming to mitigate market failures, by assisting constrained firms. In turn, public financial support seems to boost market selection mechanisms by favouring ‘good’ firms and pushing less-endowed firms outside the market.