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

Published online by Cambridge University Press:  22 May 2014

Cornelia Woll
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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.

Type
Articles
Information
Government and Opposition , Volume 49 , Issue 3: The Power of Finance: Before and After the Great Financial Crash , July 2014 , pp. 426 - 451
Copyright
Copyright © Government and Opposition Ltd 2014 

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Footnotes

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Cornelia Woll is Professor of Political Science at Science Po, Paris. Contact email: [email protected].

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