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Free keywords:
Financialisation; household debt; banks; regulation; Germany; European Union
Abstract:
Why did household debt in Germany not increase after the year 2000? This
article offers a supply-side explanation for this deviant debt trajectory by
tracing the historical evolution of retail banking in the German political
economy. It argues that at the end of the 1990s and in the light of
European Monetary Union, profitability issues and banking fragmentation
became severe enough to interrupt the path towards credit-based
financialisation as prevalent among other capitalist economies. These
factors interacted with a traditional lack of tools and incentives for rapid
credit expansion, even though they were renegotiated in the processes of
financial liberalisation, internationalisation and innovation. By employing
historical-qualitative as well as statistical evidence for the argument,
the paper’s contribution becomes twofold. First, it introduces and
conceptualises retail banking as a focal point in the analysis of national
financial systems and their transformation. Second, it complicates the
standard accounts of German non-financialisation and reveals the
‘contested’ character of financial reform.
