Description

Financial systems are central to the orderly function of modern capitalist economies, yet the financial systems of most emerging market economies remain underdeveloped, fragile, and subject to exploitation by economic and political elites. This paper explores the political origins–and the political consequences–of financial development in Southeast Asia. Recognizing that financial development can be both politically useful and politically threatening, it demonstrates how the postcolonial regimes of Southeast Asia created different kinds of financial systems that were designed to support different kinds of political systems. The various kinds of postcolonial challenges facing these countries accordingly shaped their subsequent trajectories of financial development. These findings have important consequences for our understanding of the origins of financial systems in emerging economies, and speak to fundamental debates about the role of the state in economic development.

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Thomas Pepinsky is an Assistant Professor in the Department of Government at Cornell University, where he is also the Director of the International Political Economy Program and Associate Director of the Cornell Modern Indonesia Project. His research focuses on comparative politics and international political economy, with a focus on emerging markets in Southeast Asia. He is the author of Economic Crises and the Breakdown of Authoritarian Regimes (Cambridge University Press, 2009), as well as articles in World Politics, Political Research Quarterly, Studies in Comparative International Development, Journal of Democracy, Journal of East Asian Studies, and several other journals and edited volumes. His current research focuses on comparative responses to the Great Meltdown of 2008-09, the financial politics in emerging economies, and political Islam and the economy in Indonesia.