Coercive Credit Regimes

Industrial policy is back, but its twin, credit policy, remains confined to academic debates. We theorise credit policy as the coercive steering of credit flows for transformative purposes, that is, developmentalist credit policy. Coercion, we argue, has two pillars: control over and through credit. We introduce the concept of credit financing to capture the critical but not dominant role of central banks in supporting coercive steering. We then elaborate the institutional set-up and instruments of credit regimes where the state is in close control of credit flows by drawing on the developmentalist credit policy experience of South Korea and Japan, in comparison with the ’coercive-less’ credit inclusion policy of India’s developmental state and contemporary experiments in China. This conceptualization is, we argue, fundamental for exploring the institutional politics behind transformative state ambitions.