Funding in the Post-Crisis Economy: Lessons from the Crisis

This seminar explored key questions relating to finance that had been posed as a result of the 2008 crisis. The discussion centred around the main questions of whether a new paradigm of economic management and governance is needed, and whether such a paradigm will imply a turn to greater state intervention in the economy, or whether an entirely new relationship and balance of interests between the public and private sectors will be found.

The first presentation was made by Anastasia Nesvetailova (City University), who discussed the role of the shadow banking system in the global financial crisis of 2007–9, and especially the explosive growth of shadow banking in the immediate pre-crisis era. Whilst current explanations for this growth tend to hold two contrasting positions - one emphasising factors endogenous to the banking sector (notably regulatory arbitrage and financial innovation); the other emphasising exogenous factors (notably the 'search for yield') – Nesvetailova offered an alternative 'disaggregated' view of shadow banking.

This was followed by a presentation from Photis Lysandrou (City University), which explored more recent trends in financialisation and its role in contemporary global capitalism. In particular, the argument was developed that financialisation is a functionally useful feature of contemporary capitalism that is entirely in keeping with the latter’s continuing development as a commodity system. In particular, that financialisation represents the extension of the commodity principle along the axis of time.

The second session of the day featured presentations from Johnna Montgomerie (Goldsmiths) and Jan Toporowski (SOAS). Montgomerie's presentation, titled 'What does debt 'do' to the household economy? Visualising the budget sheet effects of indebtedness', explored the way in which private credit is able to affect the money supply. Toporowski went on to discuss the financial functions of private equity, and especially the way in which processes of financialisation are able to affect the structure of private firms.

The third session moved away from underlying processes of financialisation, to consider new and innovative efforts to regulate those processes. Jennifer Churchill (SOAS) discussed work that she had conducted with Bruno Bonnizzi (SOAS) on the role of state regulation in pension fund asset allocation. This was followed by a presentation by Stefano Pagliari (City) of recent empirical findings from research conducted with Kevin Young (UMassAmherst) into the business networks that form in support of different types of regulatory policies.

Finally, the day ended with a public debate, led by Izabella Kaminska (Financial Times) and Ann Pettifor (New Economics Foundation). This provided an opportunity for members of the public to engage in discussions surrounding the nature of the debt crisis and potential alternative forms of regulation. Kaminska and Pettifor opened the discussion with presentations of their own views regarding the current problems facing global finance, and the importance for global growth of finding more effective methods of regulation.

Funding in the Post-Crisis Economy: Lessons from the Crisis
City University, London, 09 July 2015

Programme

10:00-11:30 Finance and The Shadow Banking System (Chair: Paul Lewis)

  • Emergent Theories of Shadow Banking  - Anastasia Nesvetailova 
  • US and European Shadow Banks in the Pre-Crisis Era: The Division of Labour in the Securities Production Process -  Photis Lysandrou

11:45-13:15  The Role of Debt in the Economy (Chair: David Bailey)

  • What does debt 'do' to the household economy? Visualising the budget sheet effects of indebtedness - Johnna Montgomerie
  • The financial  functions of private equity -  Jan Toporowski

14:30-16:00   Understanding Reponses to New Regulations (Chair: Photis Lysandrou)

  • Laws of demand: role of state regulation in pension fund asset allocation - Jennifer Churchill and Bruno Bonnizzi
  • Is Finance Different? Investigating Cross-Sectoral Business Solidarity on Regulatory Policy - Stefano Pagliari and Kevin Young

16:30 -18:30 Plenary session (open to the public)

Funding in the Post Crisis Economy: a View from the Financial Markets

  • Izabella Kaminska (Financial Times)
  • Ann Pettifor (New Economics Foundation) 

More information

Find out more about the ESRC Seminar Series: Understanding the Post-Crisis Landscape.