Revisiting the concept of semi-peripheral financialisation

Financialization, confidence, and sovereign debt markets: The role of Credit Default Swaps in the Southern European debt crisis

“…These southern European countries do not constitute a homogeneous model in economic, cultural, or institutional terms. However, they share the same peripheral position within the European Union (Rodrigues et al, 2020). Following Rodrigues et al (2016), the term semi-periphery takes on a dual meaning.…”

Divergence via Europeanisation: rethinking the origins of the Portuguese debt crisis

“…In 1984 the banking system was opened to private, foreign and domestic entry for the first time since the revolution. 66 Following accession, there was a wide-ranging overhaul of the financial system propelled by various EU banking directives and other measures. 67 Among the most important were the EU's Second Banking Directive of 1993, the EU's Capital Adequacy Directive (91/121/EEC), as well as Directives on the components of banks' capital (89/299/EEC), on the BIS solvency ratio (89/647/EEC) and on consolidated supervision (89/30/EEC).…”

“…68 The rate for compulsory reserves in the Banco de Portugal fell from 17 per cent in 1989 to 2 per cent in 1994 in line with European practice. 69 Privatisations also played an important role in this changing landscape. 70 By the 1990s, as a result of adhering to the requirements from the EC/EU, the financial system in Portugal had completely transformed.…”

“…Similar to the rest of the periphery, interest rates plummeted and with the absence of exchange rate risk, between 2000 and 2008 Portugal had access to a cheap pool of debt, in the form of long term bonds and notes. 75 The favourable conditions associated with the prospect of joining the euro encouraged households to increase their borrowing at such high rates -namely disinflation, lower nominal and real interest rates, and rapidly rising income levels. 76 Similarly, the structural reforms relating to the banking sector ensured that there was a wide supply of credit to meet consumer demand, and the liberalisation of the credit market helped foster a strongly competitive environment where banks were eager to meet the growing borrowing demands.…”

“…At the beginning of the 1990s 40 per cent of bank loans to non-financial firms went to manufacturing firms and this declined to 20 per cent in the 2000s. 83 However, the percentage of the construction and real estate sectors in total business debt rose from 10 per cent in 1992 to almost 40 per cent in 2008. 84 As a result of lower interest rates, an increased credit supply, and growing bank competition to direct a surge in capital flows into the non-tradable sector, macroeconomic imbalances grew.…”