Beyond market failures: the market creating and shaping roles of state investment banks. Issue 4 (1st October 2016)

• Record Type: Journal Article
• Authors: Mazzucato, Mariana; Penna, Caetano C.R.
• Is Part Of: Journal of economic policy reform. Volume 19:Issue 4(2016)
• Page Start: 305
• Page End: 326
• Publication Date: 2016-10-01
• Subjects: state investment banks -- public investment policy -- market failure -- development banking -- mission-oriented policy; G20 (financial institutions and services general) -- O16 (economic development financial markets) -- O38 (technological change government policy) -- L52 (industrial policy) -- P16 (capitalist systems political economy); Economic policy -- Periodicals; Commercial policy -- Periodicals; Monetary policy -- Periodicals; International trade -- Periodicals; Developing countries -- Economic policy -- Periodicals; Former Soviet republics -- Economic policy -- Periodicals; Post-communism -- Periodicals; Policy sciences -- Periodicals; 338.9
• DOI: 10.1080/17487870.2016.1216416
• Languages: English
• ISSNs: 1748-7870

Abstract

Abstract : The paper develops a typological framework of the roles of state investment banks (SIBs) in the economy. The typology identifies four different roles: countercyclical; developmental; venture capitalist; and challenge-led. The paper conceptually elaborates the typology by first providing a historical overview of SIBs, and then discussing how the mainstream "market failure theory" justifies them. It then advances a different conceptualization based on insights from heterodox economics, showing that all roles of SIBs are more about market creating/shaping rather than market-failure fixing. The paper concludes with a proposal of a new agenda for research on SIBs based on our typological framework.