Capital, information, language and empire: A political transaction cost view of global bank expansion.

摘要

My dissertation is motivated by questions of how, and why, certain banks and other financial institutions grew across national borders to become so politically powerful. Employing a transaction costs framework, I explain banking's risk and return nature, introduce a property rights concept of financial club goods, and examine global banks as political institutions. Arguing that languages are defining legacies of former empires, I employ languages as instrumental variables which proxy for the political power of empires when analyzing the cross-border expansion of network banks.;The first paper chronologically follows the transformation of merchant banking into investment banks, then into SIFIs of today [Systemically Important Financial Institutions]. Over two centuries, banks "self-designed" into increasingly larger organizations- or simply failed. Surviving banks' managers accomplished organizational redesign by quickly adopting emergent technologies in information and communication and by employing "internal" technologies involving contract law, organizational developments, and financial engineering. Using emergent technologies, banks engineered club good market structures to alleviate or transfer financial risk while enhancing profits through hierarchical ownership within the club. The ultimate club for aspiring banks is to join is the "Too-Big-To-Fail" club [TBTF].;The second paper argues the world's SIFIs have built their networks on their home country's political power with a unique twist: imperial legacies grant significant advantage to some banks, and those banks have built their networks within imperial footprints. This paper sets up a counterfactual argument by showing the rise of US financial hegemony over the last century, then asks why the US attained systemic financial hegemony but US banks do not dominate the "TBTF club" of the largest global banks.;The third paper notes language is both an economic tool and also a vehicle to transmit cultural values, and shows that former imperial languages are employed differently in international trade and in FDI. Considerable power obtains from languages' economic use; we empirically examine the asymmetric nature of this power and introduce two explanatory concepts: language intensity to explain differences between FDI and trade, and cultural concentration to examine imperial language legacies.