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Market-Based Banking and the International Financial Crisis$
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Iain Hardie and David Howarth

Print publication date: 2013

Print ISBN-13: 9780199662289

Published to Oxford Scholarship Online: September 2013

DOI: 10.1093/acprof:oso/9780199662289.001.0001

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Belgium and the Netherlands: Impatient Capital

Belgium and the Netherlands: Impatient Capital

(p.79) 4 Belgium and the Netherlands: Impatient Capital
Market-Based Banking and the International Financial Crisis

Michele Chang

Erik Jones

Oxford University Press

The purpose of this paper is to explain how Belgium and the Netherlands could end up presiding over one of the worst financial disasters of the recent global economic and financial crisis despite having a reputation for relatively sound economies and prudent financial systems. The answer is found in a combination of excess domestic savings, financial market liberalization and internationalization that led to a system that can be characterized as ‘market-based banking’. Belgium and the Netherlands started out at the end of the 1980s with significant deposits hidden away in relatively closed national financial systems dominated by traditional commercial and savings banks; they ended up twenty years later struggling to stabilize giant bank-assurance conglomerates that relied on access to international interbank markets to service assets worth many times the gross domestic product of either country. This story reveals the obsolescence of existing stereotypes for bank-based systems in the classification of varieties of financial capitalism. It also offers a cautionary tale about integrated international financial markets.

Keywords:   Belgium, Netherlands, Dexia, Fortis, Bancassurance, market-based banking

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