Europeanisation as a driver of dependent financialisation in East-Central Europe: insights from the Baltic states

Pataccini, Leonardo

doi:10.1080/13563467.2021.1994542

Cited by 5 publications

(2 citation statements)

References 86 publications

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“…In this framework, in the late 1990s, the Baltic banking sector underwent an intensive process of foreignization dominated by Scandinavian institutions. As a result, by 2005, foreign banks owned 58% of the total banking assets in Latvia, 92% in Lithuania and 100% in Estonia (Pataccini, 2020).…”

Section: Conceptualizing Dependent Financialization In the Baltic Statesmentioning

confidence: 99%

“…Since their arrival, they substantially increased lending, particularly to households (Bohle, 2018). In absolute terms, in 2000–2007, the consolidated debt of the private sector increased by more than 5 times in Lithuania, 6 times in Estonia and 8 times in Latvia (Pataccini, 2022). For this, parent banks took debt in euros (EUR) on international capital markets at very low interest rates and lent them to Baltic subsidiaries through internal capital markets at higher rates (De Haas and Naaborg, 2006).…”

Section: Conceptualizing Dependent Financialization In the Baltic Statesmentioning

confidence: 99%

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The (un)usual suspects? Exploring the links between illicit financial flows, Russian money laundering and dependent financialization in the Baltic states

Pataccini

2023

Competition & Change

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The paper analyses the links between illicit financial flows, money laundering and dependent financialization using the Baltic states as exploratory case studies. Since the restoration of their independence, Estonia, Latvia and Lithuania have been involved in several massive money laundering scandals, with illicit funds flowing mainly from Russia, as well as other former Soviet Republics. Currently, these episodes have taken on a new dimension in light of the Russian invasion of Ukraine. Until recently, the prevailing narrative was that illicit financial flows and money laundering in the Baltic states resulted from a failure in the financial system’s ability to monitor and detect these operations. However, this paper argues that far from being a simple shortcoming, money laundering and illicit financial flows in the Baltic states are products of dependent financialization in two main ways: first, in the decade leading up to the global financial crisis, the overall economic performance and the returns of financial actors in these countries became dependent on foreign capital inflows. This dependency was key to enabling the arrival of illicit financial flows and money laundering from the post-Soviet space, especially after the crisis. Second, due to its comparative advantages and its subordinate position in the international financial system, the banking sector of the Baltic states was used as an intermediary in global financial networks of money laundering for funds from the former USSR, where it assumed most of the financial, legal and reputational risks. Finally, the research also points to the emergence of new risks.

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Section: Conceptualizing Dependent Financialization In the Baltic Statesmentioning

confidence: 99%

Section: Conceptualizing Dependent Financialization In the Baltic Statesmentioning

confidence: 99%

The (un)usual suspects? Exploring the links between illicit financial flows, Russian money laundering and dependent financialization in the Baltic states

Pataccini

2023

Competition & Change

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Peripheral housing rentierisation in Southern Europe: reflections from the Portuguese case

Santos

2024

Housing Studies

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Assessing financialization under international financial subordination: a mixed-methods study of Brazilian and Turkish non-financial corporations

Kaltenbrunner,

Karaçimen,

Rabinovich

2024

Socio-Economic Review

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This article investigates the changing financial behaviour of Brazilian and Turkish non-financial corporations (NFCs) in the context of international financial subordination. Recent empirical evidence shows that emerging capitalist economies’ (ECEs) NFCs have increased their holdings of very short-term financial assets (mainly cash), whilst borrowing heavily from (international) financial markets and banks. Drawing on an extensive mixed-method study, we show that, instead of being paradoxical or driven by speculative carry trade operations, the ‘wasteful’ combination of holding very liquid and lower yielding assets while borrowing at higher costs (largely denominated in foreign currency) can be contextualized in the subordinate integration of ECEs firms into the global economy. Whereas cash holdings protect against macroeconomic uncertainty, ECEs firm borrowing is largely determined by international market conditions in the context of structural financing constraints. Moreover, our results show the dualistic and heterogenous nature of ECEs firm financial behaviour, which mirrors the polarity observed in those economies’ productive structure and structural balance of payments constraints: only firms with secure access to foreign exchange—either through exports or active internationalization—have the collateral to interact with global—dollar dominated—financial markets. Finally, our article points to the important, yet contradictory, role of the state in ECEs firm financial behaviour. In instances where foreign exchange generating activities in the private sector are not given, the state assumes a crucial role in enabling firms’ engagement with global financial markets; yet it is that same engagement, which—in the context of international financial subordination—creates acute macroeconomic vulnerabilities which at times force the state to restrict those same operations.

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Europeanisation as a driver of dependent financialisation in East-Central Europe: insights from the Baltic states

Cited by 5 publications

References 86 publications

The (un)usual suspects? Exploring the links between illicit financial flows, Russian money laundering and dependent financialization in the Baltic states

The (un)usual suspects? Exploring the links between illicit financial flows, Russian money laundering and dependent financialization in the Baltic states

Peripheral housing rentierisation in Southern Europe: reflections from the Portuguese case

Assessing financialization under international financial subordination: a mixed-methods study of Brazilian and Turkish non-financial corporations

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