Banking Nationalism and Resolution in Italy and Spain

Shawn Donnelly*, Gaia Pometto

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

2 Citations (Scopus)
46 Downloads (Pure)

Abstract

This article contributes to the comparative literatures on varieties of financial capitalism, economic nationalism and bank resolution with a focus on Spain and Italy’s management of bank insolvency and resolution between 2008 and 2018. Both countries’ alternative banks faced enormous challenges through prolonged economic decline and declining loan repayments, both turned to depositors to become investors in lieu of attracting arm’s-length investors to inject capital, and both had strong connections with local political authorities that resisted bank reform. But Spanish banks were restructured successfully in accordance with EU law while local government ties complicated Italian resolutions. We explain this outcome through two factors: state strength buttressed by outside assistance from the European Stability Mechanism; and strong international marketization, which enhanced the drive to restructure quickly. Spain’s decision to ask for loans from the European Stability Mechanism to help restructure its heavily marketized savings banks allowed it to finish reforms after 2012.
Original languageEnglish
Pages (from-to)187-206
Number of pages20
JournalGovernment and opposition
Volume59
Issue number1
Early online date2 Aug 2022
DOIs
Publication statusPublished - 2024

Keywords

  • Banking Union
  • Single Resolution Mechanism
  • Spain
  • Italy
  • economic nationalism
  • Varieties of capitalism
  • European Union (EU)
  • UT-Hybrid-D

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