Dominant Coalitions and Capital Market Changes in Northeast Asia

Xiaoke Zhang

in East Asian Capitalism

Published in print July 2012 | ISBN: 9780199643097
Published online September 2012 | e-ISBN: 9780191741944 | DOI:
Dominant Coalitions and Capital Market Changes in Northeast Asia

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This chapter provides a political economy account of macrostructural varieties of changing financial capitalism in Korea and Taiwan. The past two decades have witnessed the expansion of capital markets and the market-oriented transformation of traditionally bank-based financial systems in the two economies. Despite this seemingly convergent trajectory of financial market changes, Korea and Taiwan have displayed striking differences in the size and activity of capital markets, the relative importance of banks versus non-bank financial institutions, and the market orientation of national finance. This chapter posits that fundamental changes and variations in the financial market structure of Korea and Taiwan have been predicated on the emergence and configuration of the dominant coalitions. In Korea and Taiwan, the dominant coalitions that have born crucially on regulatory rules and market practices have differed in the policy preferences of key actors and the political strength of these actors. These differences exerted divergent shaping influences on the relative importance of capital markets, banks, and non-bank financial institutions.

Keywords: South Korea; Taiwan; banks; capital markets; non-bank financial institutions; bank-based financial systems; market-oriented systems; coalitions

Chapter.  8761 words.  Illustrated.

Subjects: Political Economy

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