Skip to main content

Re-conceptualizing the political economy of finance in the post-crisis era

  • W. Travis Selmier and W. Kindred Winecoff

This article introduces a special issue of Business and Politics on Property Rights, Financial Risk, and the Politics of a Networked Global Financial System. We introduce aspects of the articles in the issue and situate them within existing literatures in financial economics, public policy, political economy, regulation and governance, and network science. We do this through examining four key contributions in the special issue. First, we show that common conceptualizations of property rights in financial markets ignore the multidimensional nature of financial goods; examples of all goods types can be found in modern finance, and this fact has important implications for the politics and regulation of these markets. Second, we argue that models of financial actors as independent, atomistic agents neglect the relational nature of financial markets, and argue that theory and methodology from network science, financial economics and political economy provide useful ways to analyze these interdependent systems. Third, we discuss how the relational nature of risk leads to hierarchical patterns of financial interdependence, which bequeaths substantial amounts of power—within both market and political systems—to those actors that occupy core positions within the structure of interdependence. Fourth, we integrate ideas from papers in this special issue and related literature with concepts from the Ostrom School of political economy to consider how monitoring, self-governance, and polycentric applications might improve financial market governance. This issue's papers thus constitute one of the first combined attempts to bring the Ostrom School into substantive conversation with financial market governance and risk analysis through comparative and international political economy disciplines.

Corresponding author
* Corresponding author: W. Travis Selmier II, Indiana University Bloomington, Bloomington, IN, USA, email:
W. Kindred Winecoff, Indiana University Bloomington, Bloomington, IN, USA.
Hide All
Abdelal Rawi. 2007. Capital Rules: The Construction of Global Finance. Cambridge, MA: Harvard University Press.
Admati Anat and Hellwig Martin. 2013. The Bankers' New Clothes: What's Wrong with Banking and What to Do about It. Princeton, NJ: Princeton University Press.
Alessandri Piergiorgio and Haldane Andrew G.. 2009. “Banking on the State.” Bank of England working paper.
Aliber Ron Z. and Kindleberger Charles P.. 2015. Manias, panics and crashes: a history of financial crises, seventh edition. New York: Palgrave Macmillan.
Aligicia Paul D. 2014. Institutional diversity and political economy: the Ostroms and beyond. New York: Oxford University Press.
Allen Franklin and Santomero Anthony M.. 1998. “The Theory of Financial Intermediation.” Journal of Banking and Finance 21(11–12): 14611486.
Allen Franklin and Babus Ana. 2009. “Networks in Finance.” In The Network Challenge, edited by Kleindorfer Paul and Wind Jerry. Upper Saddle River, Prentice Hall Publishing, 367382.
Bagehot Walter. 1873. Lombard Street: A Description of the Money Market. London: Henry S. King and Co.
Basel Committee on Banking Supervision. 2011. “Global systemically important banks: assessment methodology and the additional loss absorbency requirement.” Bank for International Settlements. Accessed on 8 June, 2013 at
Bhidé A. 2009. “An Accident Waiting to Happen.” Critical Review 21(2–3): 211–47.
Brewer Elijah and Jagtiani Julapa. 2013. “How Much Did Banks Pay to Become Too-Big-To-Fail and to Become Systemically Important?Journal of Financial Services Research 43(1): 135.
Brunnermeier Markus K., Gary Gorton and Arvind Krishnamurthy 2012. “Risk Topography.” NBER Macroeconomics Annual 2011 26: 149176.
Bryce Herrington J. 2012. “Review Essay: Polycentric Governance, Capital Markets, and NGOs as Regulatory Bodies: Expanding the Scope of Ostrom's Understanding Institutional Diversity.” Politics & Policy 40(3): 519–35.
Büthe Tim. 2010. “Private regulation in the global economy: A (p)review.” Business and Politics 12(3): 138.
Calomiris Charles. 2011. “An Incentive-Robust Programme for Financial Reform.” Manchester School 79(S2): 3972.
Carruthers Bruce. G. and Chul Kim Jeong. 2011. “The sociology of finance.” Annual Review of Sociology 37: 239–59.
Cerny Philip. 2014. “Rethinking Financial Regulation: Risk, Club Goods, and Regulatory Fatigue.” In Handbook of the International Political Economy of Monetary Relations, edited by Oatley Thomas and Winecoff W. Kindred. Cheltenham, U.K.: Edward Elgar Publishing, 343–63.
Chwieroth Jeffrey M. and Sinclair Timothy J.. 2013. “How you stand depends on how we see: International capital mobility as social fact.” Review of International Political Economy 20(3): 457–85.
Chapman Stanley D. 1984. The Rise of Merchant Banking. London, U.K.: George Allen & Unwin.
Cohen Benjamin J. 1998. The Geography of Money. Ithaca, NY: Cornell University Press.
Congleton Roger D. 2012. “On the political economy and limits of crisis insurance: The case of the 2008–2011 bailouts.” Public Choice 150(3–4): 399423.
Culpepper Pepper D. and Reinke Raphael. 2014. “Structural power and bank bailouts in the United Kingdom and the United States.” Politics & Society 42(4): 427454.
Diamond Douglas W. 1984. “Financial intermediation and delegated monitoring.” Review of Economic Studies 51(3): 393414.
Dowd Kevin. 1994. “Competitive Banking, Bankers' Clubs, and Bank Regulation.” Journal of Money, Credit and Banking 26(2): 289308.
Drezner Daniel W. 2007. All Politics Is Global: Explaining International Regulatory Regimes. Princeton, NJ: Princeton University Press.
Eccles Robert G. and Crane Dwight B.. 1988. Doing Deals: Investment Banks at Work. Cambridge, MA: Harvard Business Press.
Emmenegger Patrick. 2015. “The Long Arm of Justice: U.S. Structural Power and International Banking.” Business and Politics 17(3): 473–93.
Fichtner Jan, Heemskerk Eelke M., and Garcia-Bernardo Javier 2017. “Hidden Power of the Big Three? Passive Index Funds, Re-concentration of Corporate Ownership, and New Financial Risk.Business and Politics 19(2): 298326.
Goodhart Charles A.E. 1987. “Why Do Banks Need a Central Bank?Oxford Economic Papers, 39.
Gorton Gary. 2014. “The Development of Opacity in U.S. Banking.” Yale Journal on Regulation 31(3): 825–54.
Heemskerk Eelke M. and Takes Frank W.. 2016. “The corporate elite community structure of global capitalism.” New Political Economy 21(1): 90118.
Helleiner Eric. 2002. The Making of National Money: Territorial Currencies in Historical Perspective. Ithaca, NY: Cornell University Press.
Helleiner Eric. 2011. “Understanding the 2007–2008 Global Financial Crisis: Lessons for Scholars of International Political Economy.” Annual Review of Political Science 14: 6787.
Holmström Bengt. 1999. “The Firm as a Subeconomy.” Journal of Law, Economics, and Organization 15(1): 74102.
Houben Arendt. 2013. “Aligning Macro- and Microprudential Supervision.” In Financial Supervision in the 21st Century, edited by Kellermann A.J.. Heidelberg, Germany: Springer-Verlag Berlin.
Hu Henry T.C. 2012. “Too Complex to Depict? Innovation, ‘Pure Information,’ and the SEC Disclosure Paradigm.” Texas Law Review 90(7): 1601–715.
Hughes Joseph P. and Mester Loretta J.. 1993. “A Quality and Risk-Adjusted Cost Function for Banks: Evidence on the ‘Too-Big-To-Fail’ Doctrine.” Journal of Productivity Analysis 4(3): 293315.
Kapstein Ethan B. 1994. Governing the Global Economy: International Finance and the State. Cambridge, MA: Harvard University Press.
Knight Frank H. 1921. Risk, Uncertainty, and Profit. Boston, MA: Hart, Schaffner & Marx; Houghton Mifflin. Available online from Library of Economics and Liberty, (accessed 8 March 2017).
Krippner Greta R. 2011. Capitalizing on Crisis: The Political Origins of the Rise of Finance. Cambridge, MA: Harvard University Press.
Lo Andrew W. 2012. “Reading about the financial crisis: A twenty-one-book review.” Journal of Economic Literature 50(1): 151178.
Loriaux Michael. 1997. Capital Ungoverned: The Dismantling of Activist Credit Policies in Interventionist States. Ithaca, NY: Cornell University Press.
Mackenzie Donald. 2006. An Engine, Not a Camera: How Financial Models Shape Markets. Cambridge, MA: MIT Press.
Maxfield S., Winecoff W. Kindred, and Young Kevin. 2017. “Is There Still Room for Patience? An Empirical Investigation of the Financialization Convergence Hypothesis.” Review of International Political Economy forthcoming.
May Robert M., Levin Simon A., and Sugihara George. 2008. “Complex systems: Ecology for bankers.” Nature 451: 893895.
McGinnis Michael D. 1999. “Introduction.” In Polycentricity and Local Public Economies: Readings form the Workshop in Political Theory and Policy Analysis, edited by D Michael. McGinnis . Ann Arbor, MI: University of Michigan Press.
McGinnis Michael D. 2007. “Missing Institutions and Polycentric Governance.” Working paper, Indiana University. (Accessed on 3 April, 2010).
McGinnis Michael D. 2010. “An Introduction to IAD and the Language of the Ostrom Workshop: A Simple Guide to a Complex Framework for the Analysis of Institutions and their Development,” Version 1b. Institutional Analysis and Development Symposium, University of Colorado Denver, 9–10 April 2010.
McGinnis Michael D. and Elinor Ostrom 2014. “Social-ecological System Framework: Initial Changes and Continuing Challenges.Ecology and Society 19(2): 30.
Mishkin Fredrik S. 2006. “How Big a Problem is Too Big to Fail? A Review of Gary Stern and Ron Feldman's Too Big to Fail: The Hazards of Bank Bailouts.” Journal of Economic Literature 44(4): 9881004.
Mügge Daniel. 2011. “Limits of legitimacy and the primacy of politics in financial governance.” Review of International Political Economy 18(1): 5274.
Nair Malavika. 2016. “Caste as self-regulatory club: evidence from a private banking system in nineteenth century India.” Journal of Institutional Economics 12(3): 677698.
Nelson Stephen C. and Katzenstein Peter J.. 2014. “Uncertainty, Risk, and the Financial Crisis of 2008.” International Organization 68(2): 361392.
Oatley Thomas and Nabors Robert. 1998. Redistributive Cooperation: Market Failure, Wealth Transfers, and the Basle Accord. International Organization 52(1): 3554.
Oatley Thomas, Winecoff W. Kindred, Pennock Andrew and Danzman Sarah Bauerle. 2013. “The Political Economy of Global Finance: A Network Model.” Perspectives on Politics 11(1): 133153.
Ostrom Elinor. 1999. “Polycentricity, Complexity, and the Commons.” The Good Society 9(2): 3741.
Ostrom Elinor. 2005. Understanding institutional diversity. Princeton, NJ: Princeton University Press.
Ostrom Elinor. 2010. “Beyond Markets and States: Polycentric Governance of Complex Economic Systems.” American Economic Review 100(3): 641–72.
Ostrom Elinor and Ostrom Vincent. 1977. “Public Goods and Public Choices.” In Alternatives for Delivering Public Services: Toward Improved Performance, edited by Savas E. S.. Boulder, CO: Westview Press.
Ostrom Vincent. 1953. “State Administration of Natural Resources in the West.” American Political Science Review 47(2): 478–93.
Ostrom Vincent. 1999 [1972]. “Polycentricity [Part 1].” In Polycentricity and Local Public Economies: Readings form the Workshop in Political Theory and Policy Analysis: edited by McGinnis Michael D.. Ann Arbor, MI: University of Michigan Press.
Ostrom Vincent, Tiebout Charles M., and Warren Robert. 1961. “The organization of government in metropolitan areas: a theoretical inquiry.” American Political Science Review 55(4): 831842.
Peters B. Guy, Pierre Jon, and Randma-Liiv Tiina. 2011. “Global Financial Crisis, Public Administration and Governance: Do New Problems Require New Solutions?Public Organization Review 11(1): 1327.
Posner Elliot. 2009. “Making Rules for Global Finance: Transatlantic Regulatory Cooperation at the Turn of the Millennium.” International Organization 63(4): 665–99.
Potoski Matthew and Prakash Aseem. 2009. “A Club Theory Approach to Voluntary Programs.” In Voluntary Programs: A Club Theory Perspective, edited by Potoski Matthew and Prakash Aseem. Cambridge, MA: MIT Press.
Quaglia Lucia. 2017. “Regulatory Power, Post-crisis Transatlantic Disputes and the Network Structure of the Financial Industry.” Business and Politics 19(2): 241–266.
Rajan Raghuram G. 2006. “Has financial development made the world riskier?European Financial Management 12(4):499533.
Rajan Raghuram G. and Winton Andrew. 1995. “Covenants and collateral as incentives to monitor.” Journal of Finance 50(4): 1113–46.
Rosas Guillermo 2009. Curbing Bailouts: Bank Crises and Democratic Accountability in Comparative Perspective. Ann Arbor, MI: University of Michigan Press.
Salter Alexander. W. and Tarko Vlad. 2017. “Polycentric Banking and Macroeconomic Stability.” Business and Politics 19(2): 365–395.
Schwartz Herman Mark. 2009. “Structured finance for financed structures: American economic power before and after the global financial crisis.” In Beyond the Subprime Headlines: Critical Perspectives on the Financial Crisis, edited by Konings Martijn. London, U.K.: Verso.
Schwartz Herman Mark. 2017. “Club Goods, Intellectual Property Rights, and Profitability in the Information Economy.” Business and Politics 19(2): 191–214.
Selmier II W. Travis. 2014. “Why Club Goods Proliferated in Investment Finance.” In Handbook of the International Political Economy of Monetary Relations, edited by Oatley Thomas and Winecoff W. Kindred. Cheltenham, U.K.: Edward Elgar Publishing.
Selmier II W. Travis. 2017a. “An Institutional Perspective on Governance, Power, and Politics of Financial Risk.” Business and Politics 19(2): 215–240.
Selmier II W. Travis. 2017b. “The Power and International Politics of Money.” In Oxford Research Encyclopedia of International Studies (formerly International Studies Online), edited by Marlin-Bennett Renée. Web address forthcoming.
Selmier II W. Travis and Frasher Michelle. 2013. “The cross-Atlantic tussle over financial data and privacy rights.” Business Horizons 56(6): 767–78.
Selmier II W. Travis, Penikas Henry and Vasilyeva Kseniya. 2014. “Financial Risk as a Good.” Procedia Computer Science 31: 115123.
Singer David A. 2007. Regulating Capital: Setting Standards for the International Financial System. Ithaca, NY: Cornell University Press.
Strange Susan. 1994. States and Markets, 2nd edition. London: Pinter Publishers.
Taleb Nassim N. 2007. The Black Swan: The Impact of the Highly Improbable. New York: Random House.
Tsingou Eleni. 2015. “Club governance and the making of global financial rules.” Review of International Political Economy 22(2): 225–56.
Weimer D. and Vining A.R.. 2005. Policy Analysis: Concepts and Practice, 4th edition. Englewood Cliffs, NJ: Prentice Hall.
Winecoff W. Kindred. 2014. “Bank Regulation, Macroeconomic Management, and Monetary Incentives in OECD Economies.” International Studies Quarterly 58(3): 448–61.
Winecoff W. Kindred. 2015. “Structural power and the global financial crisis: a network analytical approach.” Business and Politics 17(3): 495525.
Winecoff W. Kindred. 2017. “Global Finance as a Politicized Habitat.” Business and Politics 19(2): 267–297.
Woll Cornelia. 2014. The Power of Inaction: Bank Bailouts in Comparison. Ithaca, NY: Cornell University Press.
Woolley Paul. 2010. “Why Are Financial Markets So Inefficient and Exploitative – And a Suggested Remedy.” chapter 4. The Future of Finance: The LSE Report. London: London School of Economics and Political Science. Accessed on July 15, 2010 at
Young Kevin. 2014. “The Complex and Covert Web of Financial Protectionism.” Business and Politics 16(4): 579613.
Young Kevin, Marple Tim, and Heilman James. 2017. “Beyond the Revolving Door: Advocacy Behavior and Social Distance to Financial Regulators.” Business and Politics 19(2): 327–364.
Young Kevin and Pagliari Stefano. 2017. “Capital united? Business unity in regulatory politics and the special place of finance.” Regulation and Governance 11(1): 323.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Business and Politics
  • ISSN: -
  • EISSN: 1469-3569
  • URL: /core/journals/business-and-politics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Full text views

Total number of HTML views: 9
Total number of PDF views: 56 *
Loading metrics...

Abstract views

Total abstract views: 348 *
Loading metrics...

* Views captured on Cambridge Core between 6th June 2017 - 22nd February 2018. This data will be updated every 24 hours.