Institutional Foundations of Subordinate Financialisation: Banking Transformation in Latin America

This thesis presents a theoretical and empirical study of the financial structure of Latin American economies in the context of financialised capitalism, using Chile as a case study. It argues that the financial structure in Latin American economies has been transformed in the past 40 years. Previous studies of this structural shift have emphasised the liberalisation of cross-border credit and investment flows, banking deregulation, and the adoption of private pension systems. This thesis develops an alternative triple-lens framework for analysing this shift, drawing on three paradigms in heterodox political economy. First, its approach is grounded in key elements of post-Keynesian economics: fundamental uncertainty, liquidity preference, and the endogeneity of money. Second, it builds on Minsky’s (1975) view of monetary capitalist economies as built on fragile interconnection among the balance sheets of financial agents whose behaviour depends on the liability structures that finance their asset positions. Third, this thesis understands the variegated financialisation of Latin American economies as unfolding from a subordinate position in the global system of financialised capitalism. Financialised capitalism has been characterised as the shift toward market-based finance, driven by US structural power in global finance. This power is reflected in the ‘Americanisation’ of national financial systems. This dissertation shows that these drivers are part of a broader process that has turned finance into a globalised market-based system centred on US dominance, as embodied in the strength of the US dollar. Using social network analysis and the results of 23 semi-structured interviews with Chilean financial market experts, this thesis empirically documents the transformation of Latin American financial structures, focusing in particular on the institutional structure of—and behaviour within—Chile’s banks and financial markets. This analysis demonstrates that Latin American economies experience financialisation from a subordinate position at the micro, meso, and macro-levels.