Can Global Capitalism Endure?

El período comprendido entre 2008 y la tercera década del siglo XXI se caracteriza por una crisis prolongada para el capitalismo global, tanto estructural como política, que se ha visto agravada por la pandemia del coronavirus. La era de la globaliza-ción ha supuesto una transformación radical en curso en las modalidades de producción y apropiación de plusvalía. Existe una imparable concentración y centralización extrema del capital a escala global en los conglomerados financieros que a su vez actúan para en-trelazar toda la masa del capital global. Ahora el sistema está experimentando una nueva ronda de reestructuración y transformación basada en una digitalización mucho más avanzada de toda la economía y la sociedad global. Los agentes del capitalismo global están intentando adquirir para el sistema una nueva oportunidad de reproduccióna través de esta reestructuración digital y mediante la reforma que algunos entre la élite global están defendiendo frente a las presiones masivas desde abajo. Másallá de la coordinación de políticas transnacionales entre estados, el poder estructural que la clase capitalista transnacional puede ejercer desde arriba sobre aquellos socavará la reforma a menos que haya una contramovilización masiva del poder desde abajo. Si alguna reforma reguladora o redistributiva llega a concretarse, la reestructuración puede, dependiendo de la correlaciónde fuerzas sociales y de clase, desencadenar una nueva ronda de expansión productiva que atenúe la crisis. Sin embargo, a largo plazo, sin una reforma más profunda que la que se vislumbra actualmente en el horizonte, es díficil observar cómo el capitalismo global podría continuar reproduciéndose. The period from 2008 into the third decade of the twenty-first century has been one long protracted crisis for global capitalism, as much structural as political, that has been aggravated by the coronavirus pandemic. The era of globalization has involved an ongoing radical transformation in the modalities of producing and appropriating surplus value. There is an extreme and still increasing concentration and centralization of capital on a global scale in the financial conglomerates that in turn act to interlock the entire mass of global capital. Now the system is undergoing a new round of restructuring and transformation based on a much more advanced digitalization of the entire global economy and society. The agents of global capitalism are attempting to purchase for the system a new lease on life through this digital restructuring and through reform that some among the global elite are advocating in the face of mass pressures from below. Beyond transnational policy coordination among states, the structural power that the transnational capitalist class is able to exercise from above over states will undermine reform unless there is a mass counter-mobilization of power from below. If some regulatory or redistributive reform actually comes to pass, restructuring may, depending on the play of social and class forces, unleash a new round of productive expansion that attenuates the crisis. In the long run, however, it is difficult to see how global capitalism can continue to reproduce itself without a much more profound overhaul than is currently on the horizon, if not the outright overthrow of the system.

Conceptual Frameworks of the Development of Banking and Insurance Interaction in Modern Conditions

The purpose of the article is to reveal conceptual frameworks for further development of the banking and insurance interaction in order to ensure the growth of the value of banking and insurance business on account of the more effective use of their potentials and opportunities.It is noted in the article that banking and insurance interaction is manifested as the provision of insurance services through banking institutions – Banсassurance, the provision of banking services through insurance companies – Assurbanking, the provision of integrated services within financial conglomerates – Allfinanz.In the course of the research, it was determined that the banking channel for the sale of insurance services is the most efficient, and Bancassurance is a system of insurance services sale through the extensive banking network. The necessity and importance of the Bancassurance development, which is actively used in all developed countries, but differs in scale, methods, organizational forms and final financial results, is revealed. This is especially relevant in the context of reforming the regulatory bodies of the state financial market.Within the study, the advantages and disadvantages of Bancassurance and the prerequisites for its development are revealed. Particular attention is paid to the requirements to insurance companies in the process of the Bancassurance implementation. It is noted within the article that the interaction of banks and insurance companies can be carried out at different levels, from the level of the cooperation agreement, agency agreement, banking and insurance cooperation, to the level of the corporate control through the mechanism of mergers and acquisitions and financial supermarket.Within the study the conclusions are made that further development of banking and insurance interaction is conceptually aimed at increasing the role of commercial banks and the formation of “financial supermarkets”, in which each customer can meet the needs of bank services, financial consulting, and insurance. JEL classіfіcatіon: G21, G22

The Modern Financial Conglomerates Competition

The national and worldwide financial markets were dramatically reorganized in the after financial crisis 2007–2009 years period. The financial systems development faced new macroeconomic environment. The financial conglomerates are actively competing on the financial markets in now day situation. The financial institutes’ competitiveness is determined more and more by the factor of financial innovations on the information technology base. And the competition is escalating. This is the result of the IT companies, eCommerce firm’s invasion in the financial area. They are using the marketplace, information platform, the Big Data technologies. The major world commercial banks answer is the business-model change. The banking sector, the financial companies, in their turn, are targeting to expend their personal client service orientation with the Fintech ecosystems instruments. The banks became the management centers of the financial conglomerates and banking groups. Their role today is realizing the asset control over the SPV, investment funds, pension funds, insurance companies, which are transformed into the financial conglomerate’s divisions. The financial sphere space extends and so far, the prudential regulation and authorities’ activity spreads to all financial business aspects. This government activity is targeting today also on the international multipole competition. For example, the USA technological and financial innovations on the global financial markets are combined with the multilateral and unilateral economic sanctions aimed at banning the Chinese economic and political expansion.

https://www.asianinstituteofresearch.org/JEBarchives/Comparison-Between-Risk-and-Return-of-Financial-Conglomerates-in-Indonesia%3A-Vertical%2C-Horizontal-and-Mixed-(TOPSIS-Analysis)

Financial conglomeration in Indonesia is a unique form because Indonesia has three financial conglomeration types that existed. There are vertical, horizontal, and mixed types. In fact, many countries are implementing vertical financial conglomerates because the supervision is easier to carry out than other types. This study tried to compare the performance of vertical, horizontal, and mixed financial conglomerates. Is it true that a vertical financial conglomerate is the best financial conglomerate compared to a horizontal and mixed one with the TOPSIS (Technique for Order Preference by Similarity to Ideal Solution) analysis? This study used return indicators and risk indicators to measure financial conglomerates' performance in the banking industry. The results showed that vertical financial conglomerates were the most superior compared to horizontal and mixed financial conglomerates. It might be attributed that vertical financial conglomerates usually have the same activities and have an explicit direct relationship between the parent company and subsidiary company so as it is more easily to supervising.

Regulatory foundations of financialisation: May Day, Big Bang and international banking, 1975–1990

From the 1970s to the 1990s there was a revolution in international financial markets, which combined the processes of financialisation and globalisation. Deregulation and financial innovation were the two underlying forces that facilitated this transformation. At the same time, distinctive national characteristics of banking structures and cultures influenced the way that financial globalisation affected the geographic distribution of financial activity. This article addresses these seismic shifts through three perspectives: changes in regulation and the geographic pattern of international banking activity, reform of the main stock markets in New York and London and the rise of financial conglomerates. It identifies complementarity as well as competition among international financial centres.

Conclusion

A new Glass-Steagall Act would break up universal banks and end the conflicts of interest that prevent universal banks from acting as objective lenders and impartial investment advisers. It would produce a more stable and resilient financial system by reestablishing structural buffers to prevent contagion between the banking system and other financial sectors. It would improve market discipline by preventing banks from transferring their safety net subsidies to affiliates engaged in capital markets activities. It would shrink the shadow banking system by prohibiting nonbanks from issuing short-term financial claims that function as deposit substitutes. It would remove the dangerous influence that large financial conglomerates exercise over our political and regulatory systems. It would end the current situation in which our financial system and our economy are held hostage to the survival of universal banks and large shadow banks. It would restore our banking system and financial markets to their proper roles as servants—not masters—of nonfinancial business firms and consumers.

Resurgence, Part II

Large banks and their political allies waged a twenty-year campaign to secure legislation that would remove the structural buffers established by the Glass-Steagall and Bank Holding Company Acts. That campaign triumphed in 1999, when Congress passed the Gramm-Leach-Bliley Act (GLBA). GLBA authorized the creation of financial holding companies that owned banks, securities firms, and insurance companies. In 2000, Congress passed the Commodity Futures Modernization Act (CFMA), which exempted over-the-counter derivatives from substantive regulation by the federal government or the states. GLBA and CFMA enabled large U.S. banks to become universal banks for the first time since the 1930s. Large U.S. securities firms responded by becoming shadow banks (and de facto universal banks) through their issuance of deposit substitutes (shadow deposits). Similar patterns of deregulation encouraged the growth of large universal banks in the U.K. and Europe. A group of seventeen U.S., U.K., and European financial conglomerates dominated global financial markets by 2000.

Nemesis

Banking crises occurred on both sides of the Atlantic during the Great Depression. Troubled universal banks were at the center of each crisis. The first U.S. banking crisis in late 1930 was caused by the failures of two large financial conglomerates. In May 1931, the collapse of Austria’s biggest universal bank triggered a series of crises that swept through Europe. Austria, Germany, Belgium, and Italy took extraordinary measures to rescue their largest universal banks. In the U.S., the Reconstruction Finance Corporation provided loans that prevented the failures of two large universal banks in 1932. However, the RFC allowed the two biggest banks in Detroit to fail in February 1933, thereby precipitating a nationwide banking panic. In contrast, Great Britain and Canada did not experience systemic banking crises despite serious economic downturns. The separation between commercial banks and securities markets in those two nations prevented financial contagion that could have undermined their entire financial systems.