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Bank Rescue Schemes in Continental Europe: The Power of Collective Inaction

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  • Cornelia Woll

    () (CERI - Centre de recherches internationales - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

Comparing bank rescue schemes in France and Germany during the banking crisis of 2008-9, this article argues that collective inaction is a little-studied aspect in the exercise of power in business-government relations. Contrary to studies that focus on lobbying, structural power or the influence of beliefs, the comparison highlights that governments depend on contributions from the financial industry during crisis management. In the negotiations to design bank support schemes, some countries, such as France, succeeded in engaging their financial sector collectively. Such public-private burden-sharing arrangements alleviate the public budget and increase mutual surveillance between banks during government support. In other countries, such as Germany, a collectively organized industry response failed, which forced the government to design an entirely public support scheme. The German government reacted to this perceived imbalance by imposing tighter banking regulation to avoid a repetition of the impotence it experienced in 2008.

Suggested Citation

  • Cornelia Woll, 2014. "Bank Rescue Schemes in Continental Europe: The Power of Collective Inaction," Post-Print hal-01045238, HAL.
  • Handle: RePEc:hal:journl:hal-01045238
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-01045238
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    Cited by:

    1. Braunstein, J├╝rgen, 2017. "Understanding the politics of bailout policies in non-Western countries: The use of sovereign wealth funds," LSE Research Online Documents on Economics 68472, London School of Economics and Political Science, LSE Library.
    2. Niamh Hardiman & Saliha Metinsoy, 2017. "How do ideas shape national preferences? The Financial Transaction Tax in Ireland," Working Papers 201710, Geary Institute, University College Dublin.

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