IGS Project Series No. 10

国際シンポジウム

金 融 化 、雇 用 、ジェンダー不平等International Symposium

Financialization, Employment, and Gender Inequality

Institute for Gender Studies
Research Organization for the Promotion of Global Womenʼs Leadership
Ochanomizu University

IGS Project Series No. 10

国際シンポジウム

金融 化 、雇 用 、ジェンダー不平等International Symposium

Financialization, Employment, and Gender Inequality

Institute for Gender Studies
Research Organization for the Promotion of Global Womenʼs Leadership
Ochanomizu University

Contents

Symposium Details........................................................... 4
Forward.......................................................................... 5
Opening Remarks, Hiroaki Itai............................................ 6
Abstracts......................................................................... 7Paper, Chandrasekhar, Finance and Instability in Asia............ 9Comments, Makoto Itoh.................................................. 39
Closing Remarks, Mariko Adachi....................................... 43
Symposium Report on IGS website................................... 45
Power Point Slides.......................................................... 47
Jayati Ghosh, Economic crises and women’s work:
Exploring progressive strategies in a rapidly changing
global environment..................................................... 47

C. P. Chandrasekhar, Finance and instability in Asia......... 63

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IGS Project Series 10
Financialization, Employment, and Gender Inequality

Symposium Details

Symposium “Financialization, Employment, and Gender Inequality”
Date:
Monday 11 APR, 2016, 18:10-20:30
Venue:
Room 604 (6th floor), Graduate School of Humanities &Sciences Building, Ochanomizu University

Opening Remarks:
Hiroaki Itai (Project lecturer of IGS）
Speaker:
Jayati Ghosh (Professor of Jawaharlal Nehru University, India)“Financial crises and the economic conditions of women”
Chalapurath P. Chandrasekhar (Professor of Jawaharlal Nehru University, India)“Finance and instability in Asia”

Discussant:Makoto Itoh (Professor emeritus, the University of Tokyo)

Closing Remarks:
Mariko Adachi (Professor of IGS)

Organizer:
Institute for Gender Studies, Research Organization for the Promotion of Global Women’s Leadership,
Ochanomizu University

Number of Participants:
41

4

Forward

この報告書は、2016 年 4 月 11 日にお茶の水女子大学で開催したジェンダー研究所主催の国際シンポジウム「金融化、雇用、ジェンダー不平等」での報告やコメントをまとめたものである。
シンポジウムにはジョヨッティ・ゴーシュ氏（インド、ジャワハルラール・ネルー大学）とチャンドラシェーカー
氏（インド、
ジャワハルラール・ネルー大学）のお二人を報告者としてお招きし、
コメンテーターを伊藤誠氏（東京大学名誉教授）に務めていただき、テーマである
「金融化、
雇用、
ジェンダー」についてお話しいただいた。
簡単に報告者の紹介をしておきたい。ジョヨッティ・ゴーシュ氏（Jayati Ghosh）は UNDP などで要職を務められるなど、世界的に著名なケインズ学派のフェミニスト経済学者で、現在ジャワハルラール・ネルー
大学の社会科学部の教授であり、経済政策研究センターにも属されている。1983 年に英国ケンブリッジ
大学で経済学博士号を取得され、以来、Handbook of Alternative Theories of Economic Development, Edward
Elgar Pub, 2016 などの著書を 12 冊、論文は 164 点、Malcolm Adisheshaiah Award for Contributions to Social
Sciences, Chennai, 2015 などの 受 賞 歴 は 12 を 数 える。World Economic Review, Review of Social Economy,
Journal of International Development, Journal of Post Keynesian Economics, Review of Keynesian Economics の編集委員も務められ、また Times of India の音楽批評を担当されていたこともあり、音楽にも造詣が深い。
チャンドラシェーカー氏（C.P. Chandrasekhar）は現在ジャワハルラール・ネルー大学の社会科学部長
であり、1981 年に同大学で経済学博士合を取得されている。これまでに出版された著書は Tracking theMacroeconomy, 2001-2005, Vol. II – The World Economy, (co-authored with Jayati Ghosh), The ICFAI University
Press, Hyderabad, 2006. な ど 7 冊 に の ぼ り、 論 文 は “Trade in Financial Services”, Economic and Political
Weekly, H. T. Parekh Finance Column, Vol 50 , No 51, 19 December 2015. など 126 点に及ぶ。

このお二人の報告と伊藤誠氏のコメントをもとにして、グローバルで不安定な金融経済の様相と、その下での雇用やジェンダー不平等の問題を議論し、最後に足立眞理子氏（IGS 教授）が締めくくり、シンポ
ジウムは盛況のうちに終わった。

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IGS Project Series 10
Financialization, Employment, and Gender Inequality

Opening Remarks
板井広明 (IGS 特任講師）

本日はお茶の水女子大学ジェンダー研究所主催の国際シンポジウム「金融化、雇用、ジェンダー不平等」にお越しいただきまして、ありがとうございます。私は司会を務めます、ジェンダー研究所特任講師の板井と申します。
さて、本日はお二人からのご報告と伊藤誠 東京大学名誉教授のコメントをいただき、グローバル金融恐慌下における金融化の有り様と、雇用やジェンダー不平等について議論したいと思います。
グローバルな金融危機に関して言いますと、たとえばアメリカでは、1980 年
代に、1929 年以来の規制が緩和され、金融の自由化が始まります。これによって金融システムは大きな転換を迎え、影の銀行システム（shadow banking system）とも呼ばれるものができあがりました。銀行は自己資本を利用することなく、高収益の信用取引を可能にする「レバレッジ leverage 効果」、つまり信用取引や金融派生商品などを用いて、自己資本以上の投資を行ない、大幅な利益を得ることが可能となりました。
市場からの資金調達により、「工場も従業員もいない企業」をつくりあげるというウォール街の新たな夢が実現したとも言われた現象です。
この結果、投資は活発化したものの、利益を求める投資会社や銀行、格付け会社などの金融界が非常にリスクの高い投資案件を安全であると隠蔽・不可視化したことなどによって、金融危機が準備されます。
いわば、金融の規制緩和が行なわれることで、それ以前には起きていなかった金融危機が生じるようになったわけです。
問題は、金融危機がグローバルな形をとりつつも、その影響が各国の社会経済構造によって様々な形で現れたことです。また今日のシンポジウムのタイトルにもあるように、金融危機の負の影響はジェンダー的に異なった形で現れました。今日は、これらグローバルな金融化の影響がどのようなものであるのか、それに対する対応はどうあるべきかをめぐって、議論したいと思います。

6

Abstracts

Jayati Ghosh, “Financial crises and the economic conditions of women”*
This paper examines issues of women’s employment and decent work in
the context of the ongoing global financial and economic crisis. Recognizingthat financial and economic crises affect men and women workers differently forvarious reasons, it considers the implications of the crisis for women workers informal, informal and unpaid activities. Analysis of some specific regional crises
shows how crisis response strategies can have different impacts depending on
how gender sensitive they are, and how in turn policy responses that take into
account the differentiated impact on women workers are more likely to result in sustained and equitable
recovery. Thus, the macro and sectoral policy responses to the East Asian crisis of 1997-98 as well as theongoing crisis in the eurozone have adverse effects for women workers and consequent implications for themacroeconomics of adjustment and recovery. But the examples of Sweden in the 1990s and Argentina in the
2000s show that strategies that try to protect or enhance working conditions for women can be developed aspart of a broader macroeconomic policy framework that is consistent with fairly rapid economic recovery andimpressive subsequent growth performance.
The analysis in the paper therefore shows that better conditions for women as paid and unpaid
workers—or even simply preventing worsening conditions for them in the aftermath of crisis—requires
more than specific targeted and directed programmes. Micro-interventions need to be situated in broader
macroeconomic and sectoral policies that emphasize employment creation, universal access to good quality
essential social services such as health and education and various forms of social protection. Obviously, forsuch policies to be viable, significant re-regulation of finance may be required to prevent destabilising andvolatile movements of capital that undermine the effectiveness of stable decent employment creation.
*Ghosh’s paper is already published “Financial crises and their gendered employment impact: Emerging trends
and past experiences” in ed. Rania Antonopoulos, Gender Perspectives and Gender Impacts of the Global
Economic Crisis, Routledge, 2013.

Books:
Asia rebounds but sustained recovery needs a new growth trajectory: A synthesis study of the effects of the global financial
crisis on the Asia-Pacific Region, UNDP Regional Centre in Asia and the Pacific, Colombo, November 2009 (with
Ajay Chhibber and T. Palanivel) http://www2.undprcc.lk/resource_centre/pub_pdfs/P1116.pdf
Industrialization of China and India: The impacts on the world economy, Routledge (Taylor and Francis) 2013 (volume coedited with Nobuharu Yokokawa and Robert E. Rowthorn
India and the international economy, edited volume, Oxford University Press New Delhi in collaboration with ICSSR,
forthcoming 2015.

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Financialization, Employment, and Gender Inequality
Elgar Handbook of Alternative Theories of Economic Development, edited volume (with Erik Reinert and Rainer Kattel) 2016.

C.P. Chandrasekhar, “Finance and Instability in Asia”
Though the process of financial liberalization that began in the southerncone countries of Latin America in the mid-1970s touched Asia with a lag, it has
been embraced by most countries in the region over the last three and half decades.
As elsewhere this process has involved opening economic borders for the freeflow of financial capital from abroad, permitting foreign financial firms the rightto establish a commercial presence and providing them national treatment, andreforming regulations to allow greater operational freedoms for all financial firms.
As a result, financial structures in the region increasingly resemble those prevailingin the Anglo-Saxon world, with similar markets, institutions, instruments and regulatory framework. The
paper will examine four consequences of this. First, the vulnerability of countries to boom-bust cycles incross-border financial flows that renders them prone to crisis of the kind that the Southeast Asian crisis
epitomised. Second, a visible transition away from reliance on tax- and debt-financed public expenditure
to debt-financed private expenditure as the principal stimulus to growth. Third, the dilution of the role ofthe financial sector as an instrument of broad-based and inclusive state-led development. And, finally, theincreasing susceptibility of the domestic financial sector to fragility and failure that can take on systemic
proportions, as happened in the developed countries in 2008.

Books:
India in an Era of Liberalization, (co-authored with Meenakshi Behara) Euromoney Publications, London, 1988.
Crisis as Conquest: The Southeast Asian Crisis and its Aftermath (co-authored with Jayati Ghosh), Orient Longman, New
Delhi, 2001.
The Market that Failed: A Decade of Neo-Liberal Economic Reforms in India (co-authored with Jayati Ghosh), Leftword
Books, New Delhi, 2002. Second revised edition 2004.
Promoting ICT for Human Development In Asia 2004: India (with Simran Kumar and Kiran Karnik), NASSCOM and UNDP,New Delhi, 2004.
Promoting ICT for Human Development In Asia: Realizing the Millennium Development Goals, Regional Human Development
Report (Principal author), UNDP and Elsevier, New Delhi, 2005.
Tracking the Macroeconomy, 2001-2005, Vol. I – India, (co-authored with Jayati Ghosh), The ICFAI University Press,
Hyderabad, 2006.
Tracking the Macroeconomy, 2001-2005, Vol. II – The World Economy, (co-authored with Jayati Ghosh), The ICFAI
University Press, Hyderabad, 2006.

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C. P. Chandrasekhar, Finance and Instability in Asia

Paper

Finance and Instability in Asia
C. P. Chandrasekhar

recent feature of financial systems in Asia is a strong trend towards convergence of what wereA

very different and are still dissimilar financial structures. This diversity, which has received more

attention than the common elements in those structures, was seen as reflective of the effort of governments
spearheading and overseeing late-industrialization to shape financial structures that were best suited to therelevant national context and the strategy adopted to advance developmental objectives. Neither the financial
structures left behind by colonial regimes nor any that had emerged and evolved spontaneously because of
market demand were considered adequate for the purpose.
However since the late 1980s, a state-initiated process of deregulation and liberalization is establishingin the region financial structures resembling those prevailing in the Anglo-Saxon world, with similar markets,
institutions, instruments and regulatory frameworks. This is ironic and somewhat surprising, because as
early as the 1990s, the Savings and Loans crisis in the United States had revealed that deregulated financial
systems, besides being unsuited to financing long-term productive investments, are prone to institutional
failure and even systemic collapse. Unfortunately, that message had not been adequately absorbed bygovernments and regulators in the Asian region (as elsewhere).

The nature and consequences of financial liberalizationF

inancial liberalization can be defined as a state-led process of diluting or dismantling regulatory control
over cross-border flows of capital and over the institutional structures, instruments and activities of

agents in different segments of the financial sector. Liberalization measures can relate to internal or external
regulations. External financial liberalization involves changes in the exchange control regime. Typically,full convertibility for current account transactions accompanying trade liberalization have been either
prior or simultaneous reforms, which are then complemented with varying degrees of convertibility on thecapital account. Capital account liberalization measures broadly cover the following, in increasing degree ofintensity, but with a wide variety of patterns of implementation:
1. Measures that allow foreign residents to hold domestic financial assets, either in the form of debt orequity. This can be associated with greater freedom for domestic firms to undertake external commercial
borrowing, often without government guarantee or even supervision. Dilution or removal of controls

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on the entry of new financial firms, subject to their meeting pre-specified norms with regard to capital
investments. This does not necessarily increase competition because it is usually associated with thefreedom to acquire financial firms for foreign players and extends to permissions provided to foreign
institutional investors, pension funds and hedge funds to invest in equity and debt markets, which often
triggers a process of consolidation.
2. Measures that allow domestic residents to hold foreign financial assets. This is typically seen as a more
drastic degree of liberalization, since it eases the possibility of capital flight led by domestic residents inperiods of crisis. However, a number of countries that receive “excessive” capital inflows that do not add todomestic investment in the net and are reflected in unnecessary accumulation of foreign exchange reserves,
have turned to such measures as a means of reducing pressure on the exchange rate.
3. Measures that allow foreign currency assets to be freely held and traded within the domestic economy(“dollarization” of accounts). This is the most extreme form of external financial liberalization, which has
been implemented only in very few countries.
Internal financial liberalization typically includes some or all of the following measures, to varying degrees:
1. The reduction or removal of controls on the interest rates or rates of return charged by financial agents.
In practice this never means that the range of interest rates are “market determined”. The central bankinfluences or administers that rate structure through adjustments of the bank or discount rate at which
it lends to the banking system and through its own open market operations. The government influencesinterest rates by altering administered interest rates offered on small savings and pension/provident funddepositors. So while liberalization does not fully “free” interest rates, it has other kinds of consequences. It
encourages competition between similarly placed financial firms aimed at attracting depositors on the one
hand and enticing potential borrowers to take on debt on the other. Competition in these spheres not only
takes non-price forms, but leads to price competition that squeezes spreads and forces firms to depend on
volumes to shore up their bottom line. That is, within the range implicitly set by the central bank (and attimes the government) banks can be encouraged by liberalization of rates to accept lower spreads in thehope of neutralising the effects on profits by attracting larger volumes of business.
2. The removal or dilution of controls on the entry of new financial firms, either through greenfield projects,
subject to their meeting pre-specified norms with regard to capital investments, or through acquisition ofequity in existing firms.
3. The reduction in controls over the investments that can be undertaken by financial agents, including
permitting them to invest in areas they were not permitted to enter earlier. The consequent ability offinancial agents to straddle multiple financial activities implies that the linkages between different financial
markets tend to increase, with developments in any one market affecting others to a far greater degree thanthey did before. This increases the interlinkages between and pyramiding of financial structures.
4. Liberalization of the rules governing the kinds of financial instruments that can be issued and acquired in
the system, including the securitization of various kinds of credit assets. This transforms the traditionalrole of the banking system of being the principal intermediary bearing risks in the system. Thus, withliberalization, the focus shifts to that of generating financial assets that transfer risks to the portfolio of10

C. P. Chandrasekhar, Finance and Instability in Asia
institutions willing to hold them, and earning revenues in the form of fees and commissions as opposedto the interest rate spread adjusted for intermediation costs. Financial instruments allow agents to shareto differing degrees financial gains and risks, where the gains involved are incomes and asset priceappreciation and the risks are, therefore, income and capital risks.
5. The easing of conditions for the participation of both firms and investors in the stock market by diluting or
doing away with listing conditions, by providing freedom in pricing of new issues, by permitting greater
freedoms to intermediaries such as brokers and by relaxing conditions with regard to borrowing against
shares and investing borrowed funds in the market. In addition, conditions relating to the need to declare
share acquisitions that can lead to takeovers are also relaxed.
6. Expansion of the sources from and instruments through which firms or financial agents can access funds.
This leads to the proliferation of instruments such as commercial paper and certificates of deposit issued
in the domestic market, and allows for off-shore secondary market products such as ADRs (American
Depository Receipts or the floating of primary issues in the US market by non-US based firms) and GDRs
(Global Depository Receipts).
7. The shift to a regime of voluntary adherence to statutory guidelines with regard to capital adequacy,
accounting norms and related practices, with the central bank’s role being that of supervision and monitoring.
Market mediated controls such as the Basel norms rather than structural controls of the kind imposed by the
Glass Steagall Act in the US, which prescribe behaviour and circumscribe fields of activityfor financial firms,
define the regulatory framework, with an emphasis on regulatory forbearance rather than strict regulation.
8. The withdrawal of the state from the activity of financial intermediation, on the grounds that this is notconducive to the dominance of market signals in the allocation of capital. This is usually accompaniedby the decline of directed credit, and removal of requirements for special credit allocations to priority
sectors, whether these are government, small-scale producers, agriculture, or other sectors seen as priority
for strategic or developmental reasons. Moreover, specialised financial institutions that survive on state
support, such as development banks created to address the inadequate availability of long-term capital or
policy banks that address the unmet credit needs of agriculturalists and small enterprises, are closed to ‘level
the playing field’.

Financial deregulation in AsiaI

t is remarkable that, despite the evidence of the benefits that had been derived from shaping andsubordinating the financial sector in keeping with developmental goals, Asian countries opted forderegulation to differing degrees in the years starting from the 1980s. In some cases, this was enforced bychanges in the external economic environment. In others it was in large measure a matter of domestic policy
choice.
Consider the Japanese case, for example. Though the regulated financial sector served Japan well tillthe 1980s, the government was forced to opt for a process of deregulation under pressure. The pressure came,inter alia, from four sources. First, as successful Japanese firms moved abroad to service foreign markets
the main banks that had banked them also turned international and wanted the freedom to operate in ways
their foreign competitors did. Second, there was lobbying by international banks and financial institutions

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IGS Project Series 10
Financialization, Employment, and Gender Inequalitythat wanted Japan to open up its financial sector and provide them space in its financial system. Third, once
these external agents were permitted to enter the system, they wanted a dilution of the special relationshipthat existed between the government, the financial system and the corporate world, since that implied theexistence of internal barriers to their entry and expansion. Fourth, these agents, along with some Japanesefinancial institutions affected adversely by the deceleration of growth in the system wanted greater flexibility
in operations and the freedom to “innovate”, both in terms of choice of investments and instruments withwhich they could transact.
There was one principal reason why Japan succumbed to these pressures: its dependence on world,
especially US, markets to sustain growth. When faced with US protectionism against Japanese imports,
Japanese investors sought to “Americanise” themselves by acquiring or establishing new production
capacities in the US in areas like automobiles. In return for the “freedom” to export to and invest in the
US, Japan had to make some concessions. But US demands were quite damaging. They began by requiring
Japan to appreciate its currency. Following the Plaza accord, arrived at in New York in September 1985, theyen, which had started to appreciate against the dollar in February 1985 from a 260 yen-to-the-dollar level,
maintained its upward trend to touch the April1995 level of below 80 yen-to-the-dollar. Any economy facedwith such a huge appreciation of its currency was bound to stall, more so an export-dependent one like that ofJapan.
This trend, which damaged the balance sheets of overgeared Japanese firms and resulted in thehollowing out of Japanese industry, undermined the principal area of business of the banks as well, whichwere faced with the prospect that some of their past lending could turn non-performing. It was in response tothis that the Japanese banks joined the chorus against financial controls, demanding that they be permitted todiversify away from their traditional areas. The government responded by introducing regulatory changes in
the form of a revision of the Foreign Exchange Control Law in 1980 and giving permission for commercial
banks to create non-bank subsidiaries to lend against real estate investments. Besides expanding overseas
operations, the principal areas into which the banks diversified were lending against real estate and stock
market investments. According to Teranishi (1993): “High stock and land prices, increasing the value ofcollateral, allowed an expansion of bank lending to finance further demand for stock and land, especially bybusiness firms, and this led to a self-feeding rise.” The shares of stocks (at book value) in total bank assets
rose from 38 per cent in 1979 to 58 per cent in 1989, and that of land from 9 to 13 per cent.
The result of this was a speculative boom triggered by a mad rush into the new areas. Even as GDP
growth was slower in the 1980s than in the 1950s and 1960s, the six-largest-cities-index of real estate prices
tripled between end-March 1985 and end-March 1990, from 33.6 to 100. Similarly, there was a massive
speculative boom in stock markets with the yearly high of the Nikkei stock market index rising from12,500 in 1985 to 38,916 in 1989. By 1989 it was clear that the asset bubble was bound to burst, and in abelated effort to halt the frenzy and respond to householder complaints that acquiring housing was virtually
impossible, the government stepped in by controlling credit and raising interest rates. The net result was acollapse in both real estate and stock markets.
What followed was a huge build of bad debt with the banking system. At the beginning of 2002, theofficial estimate of the non-performing loans of Japanese banks stood at 8 per cent of GDP. In the past this12

C. P. Chandrasekhar, Finance and Instability in Asia
would not have been a problem, as it would have been met by infusion of government funds into the banking
system in various ways. But under the then-new liberalised, market-based discipline, banks were not getting
additional money to finance new NPAs. Accumulation of such bad debt inevitably leads to a credit crunch,as banks are strapped for cash and turn wary in their lending practices. Over-geared corporations withoutstanding loans on their books were no more favoured customers, resulting in a collapse of investment anda fall in utilisation for lack of long and short-term capital. Added to that, the insecure Japanese consumer
chose to hold back on consumption. The point to note is that as growth slowed and firms found it increasingly
difficult to show a profit before interest and tax, they were unable to meet past commitments on debt
servicing. As a result, the bad loans problem has only increased.
The net effect in Japan was that financial liberalization triggered a recession that consecutive roundsof reflationary spending by the state have not been able to adequately counteract. It was not the cronyism that
regulated finance generated, but the speculation and fragility that financial liberalisation resulted in, which
explains the collapse of industrial policy and the prolonged crisis of industrialisation in Japan.
Elsewhere in Southeast Asia, financial liberalization in the 1980s and later paved the way forthe fragility that came to the fore in 1997. But, in more than one case (excluding Malaysia for a shortperiod) rather than forcing a rethinking of this strategy, the 1997 crisis led to further and more extensive
liberalization. Among the consequences of this liberalization, there are a few that are particularly striking.
The first is the evidence of the growing integration of these economies with the international financial system,
as reflected in rising ratios of net capital flows to GDP in almost all of these countries. That process has
intensified after 2003, with a sharp increase in foreign bank claims on these countries in recent years. Thisoutcome is relevant not merely because it amounts to a reversal of the trend seen in the immediate post-1997
years, when as a result of the crisis the access of many countries to foreign finance appeared to be falling.
Clearly, countries now are able to attract capital and are also unable to avoid or are unwilling to address thedangers (in the form of balance of payments and/or currency crises) of dependence on volatile cross-borderflows. The result has been substantially increased fragility.
From a policy point of view the increase in the presence of foreign capital has necessitated changes
in the regulatory framework governing finance in these countries. Governments in the region have adopted
more liberal rules with regard to the functioning of different kinds of markets and institutions, provided
greater space for new instruments such as derivatives, and shown a willingness to shift to globally acceptedrules for regulation. One consequence has been a rapid shift to a Basel-type regulatory framework for thebanking system. In fact, countries in the region are on average more eager to move on to Basel III than seems
to be the case even in the developed countries where the crisis that forced the transition from Basel II to III
occurred. The message appears to be that if countries choose to adopt a macroeconomic policy frameworkthat emphasises the need to attract large volumes of foreign capital, reform of the regulatory structure
governing finance in a common, globally dictated direction seems to be a prerequisite.
A third element of commonality in these countries has been a growth process associated with a large
expansion of bank credit. Bank credit growth has overshot GDP growth in almost all countries resulting
in sharp increases in their bank credit to GDP ratios (Chart 1.1). As is well known, banks that depend on
deposits for their capital prefer to avoid exposure to illiquid assets with lower resale value, such as industrial

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capital equipment, because it exposes them to the risks associated with liquidity mismatches.
The net result has been a substantial increase in credit to the household sector or in retail credit/
personal loans for housing, for purchases of automobiles and durables and for consumption. Even by 2004,
of domestic credit that banks had extended to private borrowers, consumer lending accounted for 53 per centof total bank lending in Malaysia, 49 per cent in Korea, 30 per cent in Indonesia, 17 per cent in Thailand, 15
per cent in China, and 10 per cent in the Philippines. Even in countries where the estimates suggest that retaillending is low, such as China and Thailand, this is because banks that do not lend directly to the household
sector often do so indirectly. They provide credit to a second tier of intermediaries, often in the “shadowbanking” or informal financial sector, which in turn lend to households. While a large proportion of theseloans is for housing, other loans such as for purchases of automobiles or to finance credit-card receivables
have also increased considerably. The focus seems to be on lending short term or against assets thatconsidered more liquid.

→ p.67

Source: World Bank, World Development Indicators, available online at www.worldbank.org
The fourth common feature in the evolution of Asian financial structures is the kind of financial
diversification visible in these economies. Given the huge increase in banks’ claims on other sectors of theeconomy, the financial transformation of Asia has not been accompanied by a reduction in the importance ofbanks in the financial sector. Rather, banks still account for a substantial share of assets resting in the financial
sector. Yet the evidence of the growing role of stock and bond markets and insurance companies, mutual
funds and pension funds is overwhelming.
The nature of this presence needs further examination. Consider, to start with, the stock markets inthese countries. An index like the ratio of market capitalization to GDP (Chart 1.2), to a much greater extent
than the number of listed companies or the volume of trading, points to a huge increase in the size of thesemarkets. However, much of this is a result of the inflation in stock prices that has resulted from trading in thesecondary market. The IPO market (or the role of the stock market as a source of capital to finance corporate
investment) is still limited and highly volatile in terms of volumes mobilised. Asset price inflation occurs
partly because of the inflow of foreign capital and domestic surpluses into the secondary market which is bothnarrow (in terms of the number of companies whose shares are listed and actively traded) and shallow (in14

C. P. Chandrasekhar, Finance and Instability in Asia
terms of the number of shares of these companies available for trading after taking account of the holdings ofpromoters and long-term investors). In sum, though the stock market seems present and growing in size andvisibility, it is as yet not an important agent from the point of view of making finance a supply-side spur tocorporate investment.

Source: World Bank, World Development Indicators, available online at www.worldbank.org
Interestingly, at least until recently, the development of the bond market too was limited across theregion (Table 1.1). It is only in South Korea that the corporate local currency bond market exceeded thegovernment bond market in size. Moreover, even where bond markets are developed, government securities
seem to account for a significant share of all securities issued in the domestic market. There are differencesin the relative shares of the corporate bond market in the incremental growth of these markets, but just asbanking dominates the financial sector, government securities still dominate bond markets in most contexts.
This is of significance given the trend towards reining in government borrowing not just from central banks
but also from the open market. Unless counterbalanced by the growth of the corporate bond market, this
could see some shrinking in the relative importance of bond markets in these countries.
As for other segments of the financial sector such as insurance companies, pension funds and mutual
funds, growth is driven largely by three factors. One is the lack in many of these countries of an extensive
system of social security, necessitating investment in insurance or financial assets to provide for contingencies
and retirement. The second is the growing privatisation of parts of even the limited insurance and pension
systems, encouraging entry of a new set of private institutions, including foreign ones. And the third is thelack of adequate savings options for sections of the middle class emerging from the process of rising per
capita incomes. The latter then turn to investments in mutual funds as a means to invest small sums in equity
or debt markets. However, the resources mobilised in these sectors have not percolated into the productive
sectors.
A fifth common feature, but one that is uneven in evolution across countries, is the increase in
securitisation and the growth of derivatives markets. Given the substantial increase in bank credit and its rolein financing a segmented and diverse retail market, banks would want to transfer risk for a fee. To do that,15

IGS Project Series 10
Financialization, Employment, and Gender Inequality
they need to create low risk securities by combining assets from different markets, geographies and income
groups. Once the securitisation process begins, the distance to complex derivatives is a short one, and there isa replication of the market for complex and opaque assets in Asian developing countries as well.

Table 1.1: Size of LCY Bond Market in % GDP (Local Sources)
Ratio of government local currency bonds to GDP (%)
CN
Dec-95

HK

ID

KR

MY

5.3

12.6

15

6.9

SG

Ratio of corporate local currency bonds in GDP (%)
TH

CN

HK

ID

KR

MY

12.6

0

8.9

0.5

SG

TH

Dec-00

16.6

8.2

35.4

25.7

38

26.6

22.8

0.3

27.6

1.4

48.8

35.2

20.9

4.5

Dec-05

36.4

9.2

17.1

45.9

42.6

37.4

37.6

2.8

38.8

2.1

42.1

31.7

28.8

8.1

Dec-11

33.9

37.1

11.4

47.5

56.6

47

54.5

11.4

31.9

2

67

38

28.2

13

Sep-15

36.84

37.02

12.81

52.88

52.68

47.37 54.74 19.36

28.61

2.22

77.06

41.48

32.82 18.33

Source: Asia Development Bank at asianbondsonline.adb.org
Finally, the recent Asian experience suggests that financial proliferation largely facilitates new lines ofbusiness in financial services and affects the real economy more from the demand side by the debt-financed
household expenditure it promotes. Excessive financial sector exposure to retail markets while driving growthand substituting for the increasing inadequacy of tax-financed public expenditure and investment as a stimulus
for growth, is also becoming a source of fragility in these countries just as it did in the developed countries.
All of these point not only to the homogenization of financial structures but their tendency to shapethemselves in the image of the deregulated financial structures in the Anglo-Saxon world.

Financial fragilityFor these reasons, it is now widely accepted that financial liberalization has resulted in an increase infinancial fragility in developing countries, making them prone to periodic financial and currency crises.

These relate both to internal banking and related crises, and currency crises stemming from more open capital
accounts, the origins of which can be traced to the shift to a more liberal and open financial regime.
The attempt to render the financial structure more competitive through liberalization involves

institutional changes that unleash a dynamic that endows the financial system with a poorly regulated,oligopolistic structure, which could increase the fragility of the system. Increased dependence on fluid foreign
finance influenced by developments outside the host country; greater freedom for financial firms to invest,
including in sensitive sectors such as real estate and stock markets; enhanced ability to increase exposure toparticular sectors and individual clients; and increased regulatory forbearance all lead to increased instancesof financial failure. In addition, by institutionally linking different segments of financial markets by permitting
the emergence of universal banks or financial supermarkets, the liberalisation process increases the degree ofentanglement of different agents within the financial system and increases the impact of financial failure inunits in any one segment of the financial system on agents elsewhere in the system.
Financial markets left to themselves are known to be prone to failure because of the public goods
characteristics of information which agents must acquire and process (Stiglitz 1993, Rodrik 1998). They
are characterised by insufficient monitoring by market participants. Individual shareholders tend to refrain

16

C. P. Chandrasekhar, Finance and Instability in Asia
from investing money and time in acquiring information about managements, hoping that others would do
so instead and knowing that all shareholders, including themselves, would benefit from the information
garnered. As a result there may be inadequate monitoring leading to risky decisions and malpractice.
Financial firms wanting to reduce or avoid monitoring costs may just follow other, possibly larger, financial
firms in making their investments, leading to what has been observed as the “herd instinct” characteristic offinancial players. This not merely limits access to finance for some agents, but could lead to overlending tosome entities, failure of which could have systemic effects. The prevalence of informational externalities cancreate other problems. Malpractice in a particular bank leading to failure may trigger fears among depositors
in other banks, resulting in a run on deposits there.
Disruptions may also occur because expected private returns differ from social returns in many
activities. This could result in a situation where market players take on unnecessary risks in search of highreturns. Typical examples are lending for investments in stocks or real estate. Loans to these sectors can beat extremely high interest rates because the returns in these sectors are very volatile and can touch extremely
high levels. Since banks accept real estate or securities as collateral, borrowing to finance speculative
investments in stock or real estate can spiral. This type of activity thrives because of the belief that any losses
can be transferred to the lender through default, and lenders are confident of government support in case of acrisis. This could feed a speculative spiral that can in time lead to a collapse of the bubble and bank failures.
These tendencies effect real investment in two ways. First, inasmuch as speculative bubbles lead tofinancial crises, they squeeze liquidity, result in distress sales of assets and deflation that adversely impact
on employment and living standards. Second, inasmuch as the maximum returns to productive investment
in agriculture and manufacturing are limited, there is a limit to what borrowers would be willing to pay
to finance such investment. Thus, despite the fact that social returns to agricultural and manufacturing
investment are higher than that for stocks and real estate, and despite the contribution that such investment
can make to growth and poverty alleviation, credit at the required rate may not be available.
Meanwhile, all too often the expected microeconomic efficiency gains are not realised. Even in theUS, bond markets play a limited role and equity markets virtually no role at all in financing corporate

investment in these countries. The stock market is primarily a site to exchange risks rather than raise capitalfor investment. In developing countries the new issues market tends to be small or non-existent except inperiods of a speculative boom, and bank lending in a liberalised scenario tends to privilege risky high-returninvestment rather than investment in the commodity producing sectors like manufacturing and agriculture.
The effects on those sectors of liberalisation is indirect, being realised through the demand generating effects
of housing and personal finance booms, which too in many circumstances tends to increase the fragility of thesystem.

Capital account volatility and its implications
xternal financial liberalization, with associated capital inflows, aggravates these consequences. Indeed,E

all the evidence on capital inflows and subsequent crises suggests that once an emerging market is“chosen” by financial markets as an attractive destination, this sets in motion processes which are eventually
likely to culminate in crisis. This works through the effects of a surge of capital inflows on exchange rates

17

IGS Project Series 10
Financialization, Employment, and Gender Inequality(unless the capital does not add to an increase in domestic investment but simply ends up adding to reserves).
An appreciating real exchange rate encourages investment in non-tradable sectors, the most obvious
being real estate, and in domestic asset markets generally. At the same time, the upward movement of
the currency discourages investment in tradable sectors and therefore contributes to a process of relative
decline in real economic sectors, and even deindustrialisation in developing countries. Given the differential
in interest rates between domestic and international markets and the lack of any prudence on the part ofinternational lenders and investors, local agents borrow heavily abroad to directly or indirectly invest in theproperty and stock markets. Thus it was no accident that all the emerging market economies experiencing
substantial financial capital inflows also at a similar time experienced property and real estate booms, as well
as stock market booms, even while the real economy may have been stagnating or even declining. Thesebooms in turn generated the incomes to keep domestic demand and growth in certain sectors growing at
relatively high rates. This soon resulted in signs of macroeconomic imbalance, not in the form of rising fiscal
deficits of the government, but a current account deficit reflecting the consequences of debt-financed private
profligacy.
However, once there is growing exposure in the form of a substantial presence of internationallymobile finance capital, any factor that spells an economic setback, however small or transient, can trigger an
outflow of capital as well. And the current account deficits that are necessarily associated with capital accountsurpluses (unless there is large reserve accumulation) eventually create a pattern whereby the trend becomes
perceived as an unsustainable one, in which any factor, even the most minor or apparently irrelevant one, cantrigger a crisis of sudden outflows.

Aspects of the experience in AsiaThe global economic integration of the Asian region has been marked for some time now, but thesignificance of financial integration and of capital flows became evident only from the 1990s. Theboom of capital inflows into some Asian economies in the 1990s came to a rather abrupt halt with the Asianfinancial crisis that drastically curtailed non-FDI flows especially to the crisis-hit countries of Thailand,
Malaysia, South Korea, Indonesia and the Philippines. But global investor perceptions altered by the early
2000s, and over the last decade the region has once again become a significant recipient of net capital inflows.

Chart 1.3

→ p.68Source: IMF balance of payments database, accessed on 26 December 201518

C. P. Chandrasekhar, Finance and Instability in Asia

Chart 1.3 shows net capital inflows into major Asian economies (those included here are China, Hong
Kong SAR, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand). Throughout
the period since 2005, and even during the years of the Global Financial Crisis and its aftermath, net capital
inflows into these countries stayed positive. However, this was dominantly because of FDI, as portfolio
inflows were far more volatile and negative for particular years, notably 2006 and 2013, when the “taper
tantrum” occurred.
This would appear to confirm the perception that FDI flows tend to be more stable and long-term inorientation than portfolio flows. However, given the rather loose definition of FDI (including any purchasesof more than 10 per cent of a firm’s equity) and the growing significance of private equity investment that is
also designed for relatively quick turnaround, this may not be as true in the contemporary global economy as
it was in the past.
What Chart 1.3 does not indicate is the relative significance of different Asian economies in this total,
but that matters, essentially because so much of these capital flows have been destined for China and indeed
the pattern of capital movement across the region in general was largely driven by China. Chart 1.4 shows thesame data for this set of countries excluding China, revealing very different trends.

Chart 1.4

→ p.69Source: IMF balance of payments database, accessed on 26 December 2015
Once China is excluded, we find that net capital inflows into these countries were more often than
not negative over this period, incidentally despite very large gross inflows for certain countries in particular
years. Indeed, it was only in the four-year period immediately after the GFC that net capital flows to these
Asian countries taken together were positive. While net FDI inflows were generally positive, they were alsoquite small, and indeed declined to near zero in 2014. Meanwhile net portfolio flows have been extremely
volatile, but turned negative since 2012. Estimates suggest that the net outflow of portfolio capital from these19

IGS Project Series 10
Financialization, Employment, and Gender Inequality
countries would have been even larger in 2015.
Another peculiar feature of the patterns of capital flows, which has been evident for all emerging
market economies but was especially evident in Asia, was the accumulation of foreign exchange reserves.
These were not only the result of current account surpluses – indeed in most cases they reflected either acombination of current and capital account surpluses or reserve build-up based on borrowed finance which
involved significant interest rate losses for the concerned country. This was yet another unfortunate byproduct of the integration into global capital markets: the need to provide self-insurance against future crises
by holding large amounts of foreign exchange reserves, which accentuated the attempt to manage exchange
rates (so as to maintain external competitiveness) in the face of capital inflows.
Chart 1.5 provides some indication of the huge annual expansion of reserves by the major economies
in Asia – dominated by China, but also significant for the other countries taken together. As is well known,a significant proportion of such reserves are held in US securities paying little or no interest; indeed Asian
central banks have been the largest purchasers of US Treasury Bills for a decade.

Chart 1.5

→ p.71

Source: IMF balance of payments database, accessed on 26 December 2015
In macroeconomic terms the addition to reserves amounts to the ex ante excess of savings overinvestment, which in turn means that these countries – many of which are far from completing theirdevelopment projects and some of which still have low per capita incomes – are not using these resources forinvestment that could be significant for their future economic expansion. Some aspects of this are consideredin the final section of this chapter.
What this indicates is that despite growing financialization, increased integration into global capital
markets and associated fragilities, most of the important economies of the Asian region did not really benefit
from significant and stable inflows of foreign capital even in the most recent period. Rather, other than for
China, such flows have been highly volatile and generally in the net they have been relatively small, notconstituting significant additions to domestic savings rates. However, they have been associated with othermore problematic features of growth in these economies in the decade leading up to 2014, most notably

20

C. P. Chandrasekhar, Finance and Instability in Asia
the dramatic accretion of internal and external debt and the emergence of asset bubbles that have distorted
domestic relative prices. Some of these implications are concerned below.

Growing indebtedness
merging Asia currently appears to be all wrapped up in debt. It is interesting that the effects on AsianE

debt of the 1997 crisis (that struck a few countries in the Asia-Pacific region) and the 2008 crisis(affecting the centres of developed capitalism) have been very different. The former was followed by debt
reduction, as a result of reduction of household and government debt and repair of balance sheets that began
immediately after the crisis. By contrast, the latter was followed by significant increases rise in corporate
leverage and other forms of internal and external borrowing in developing Asia.
Outstanding international bank claims rose fourfold in the developing Asia-Pacific region, from $503.5
billion at the end of the first quarter of 2005 to $2164 billion at the end of the second quarter of 2014 (Chart
1.6). In fact, in four of the nine years, starting with the year ending the first quarter of 2005, the annual
increase in international bank claims in eight leading Asian emerging markets exceeded the highest annual
increment of $212 billion in portfolio inflows to those countries, with the increase peaking at $393 billion in
2010-11. International bank claims in these countries fell by $110 billion in 2008-09. In the developing AsiaPacific as a whole, while exposure rose by between 30 and 40 per cent a year during 2006 to 2008, it fell by
17 per cent in 2009 and thereafter recorded much lower growth rates since.

Chart 1.6

→ p.73The considerable volatility in bank exposure was a cause for concern also because of the destinationcountry and source-country concentration of these international bank claims. Over the decade until 2014,
international bank claims in the Asia-Pacific were concentrated in Hong Kong (which serves as a financialhub), China and India in that order (Chart 1.7). Hong Kong and China together accounted for between 47
and 70 per cent of aggregate exposure in the developing Asia-Pacific, with the figure exceeding 50 per centin all but one year. There were signs of a shift in exposure from Hong Kong to mainland China from 2011
onwards, encouraged no doubt by liberalisation of banking in the mainland. When India is added to thesecountries, the share of the three in developing Asia-Pacific exposure fluctuated between 66 and 82 per cent21

IGS Project Series 10
Financialization, Employment, and Gender Inequality
since 2005. While there have been multiple sources from which this debt was incurred, bank credit remained
the dominant and important source.

Chart 1.7

→ p.74Given the role that local developments in source countries of loans can have in inducing volatility andthe danger of contagion signalled during the 1997 crisis, this concentration of debt exposure is disconcerting.
More so because banks owned by residents in two countries, the US and the UK account for the bulk of the
exposure (Chart 1.8), varying from 43 and 50 per cent of the total during this period. The volatility of bankfinancing experienced during the “taper tantrum” in 2013 and subsequently since the middle of 2014 as US
Federal Reserve rate increases began to be priced in by the markets provided vindication of such concern.

Chart 1.8

→ p.75

As Akyuz (2015) has noted, in the recent period, a further source of fragility has emerged because ofchanges in bank ownership, with the increase presence of foreign banks. As a result, finance in developing
Asia has become increasingly internationalized through rapid expansion of international assets and liabilities
as conventionally defined on the basis of residence as well as on the basis of nationality (because of greaternumbers and significance of foreign subsidiaries located in such economies). This may be one reason why
the share of private debt in total external commercial debt also increased significantly in several Asian
countries between 1995 and 2013, such as from 79.8 per cent to 94.5 per cent in China and 79.4 per centto 96.6 per cent in India. (Akyuz 2015:27, Table 7) Simultaneously there was a large increase in locallydenominated debt held by non-residents. For example, at the end of 2013, in Indonesia and Malaysia, non-22

C. P. Chandrasekhar, Finance and Instability in Asia
residents accounted for more than one–third of locally-issued government bonds, almost all denominated inlocal currencies (Akyuz 2015:41). However, a very large proportion of external debt held by both public andprivate sectors is still in reserve currencies for most countries in the region.
In this context, the increase in levels of indebtedness across much of the Asian region over the past
decade is truly remarkable. In the cross-section of “emerging” Asian countries described in Chart 1.9, allcountries other than India and Indonesia registered sharp spikes in the aggregate debt of the non-financial
sector in the period after the 2008 crisis. In most countries this was partly driven by the need to provide a
countercyclical stimulus to the economy in the wake of the crisis. In the era when the stress is on holding
down government fiscal deficits and on fiscal consolidation, this required relying on an increase in credit
provision to spur investment and consumption demand. The Chinese post-crisis stimulus was a typicalexample of this. As noted above, this was also the period when the massive infusion of liquidity into thesystem by central banks resulted in a large flow of capital into equity and debt assets in the emerging markets.
By 2015 bank credit to GDP ratios were close to 300 per cent in Hong Kong, above 240 per cent in China
and Singapore, around 230 per cent in Korea. These were higher than levels that prevailed in the US (239 percent) and UK (269 per cent) and significantly higher than that in more conservative Germany (192 per cent).

Chart 1.9

→ p.76

Indonesia was an outlier with its lower absolute ratio being accompanied by relatively moderateincreases in that ratio, of around 30 per cent during both 2000-07 (before the global crisis) and 2008-2013.
The remaining countries fall into two categories. On the one hand, India and South Korea saw relatively large
increases in credit to the private sector during 2000 to 2007 of 61 and 87 per cent respectively, followed byeither a low increase (7 per cent in the case of India) or a fall (of 9 per cent for Korea) during 2008-2013.
On the other hand, Thailand, Malaysia, Singapore and China recorded falls in the ratio in the first period,
followed by significant increases in the second. In sum, if a generalized statement is to be made for the period
since 2000 it would be that except for Indonesia that has been an outlier, the rest have been characterized byrelatively high levels of bank credit outstanding and by much volatility, with periods of bank credit expansion
giving way to periods of moderation or contraction or vice versa.
When seeking to understand these trends it may be useful to keep three features of the region in

23

IGS Project Series 10
Financialization, Employment, and Gender Inequality
mind. First, all emerging markets in the Asian region liberalized regulations governing their financial sectors
and eased monetary policy, both of which have increased the flexibility of the banking sector when making
lending decisions. This provided the basis for an important commonality across the region: expansioncontraction or even boom-bust cycles in credit provision, which all of these countries (except Indonesia)
have experienced to differing degrees. An over-enthusiastic banking sector is forced to correct either becauseof balance sheet stress or a full-fledged crisis. Second, liberalization came earlier to Southeast Asia, whichthen experienced the financial crisis in 1997 that left China and India relatively unaffected. So India’s credit
boom and China’s moderation during the first period require explanations that are independent of the last
major crisis that affected the Asian region. Third, in the aftermath of the 1997 crisis Southeast Asian countries
adjusted differently in terms of both the restructuring of the banking sector and the regulation of capital flows,leading to the variations in experience that are observed.
Indonesian exceptionalism since 2000, reflected in the low level and the gradual growth of banklending to the private sector, can be explained largely by the damage suffered by its banking industry during
the crisis, which necessitated huge loan write-offs and recapitalization. Indonesia was hardest hit by the late
1990s crisis because of the dramatic expansion of banking and bank lending during the 1990s. This was theresult of a series of liberalization measures adopted since the early 1990s, starting with the removal of interest
rate and credit ceilings and leading up to the comprehensive “reform” of 1998 when private bank entry andbranching were liberalized. Together with liberalized lending norms, this led to a sharp increase in bank credit
to the private sector, from 47 per cent of GDP in 1990 (which is well above today’s level) to 61 per cent in
1997, just before the crisis. Increased lending was directed to the commercial real estate and retail segments
including lending for consumption and speculative investment in the property market. Lending to the property
sector rose from 6 per cent of GDP in 1993 to 16 per cent in 1996. Not surprisingly, when the crisis hit theregion, banks in Indonesia were badly affected, necessitating a change in banking practices that explains
Indonesia’s exceptional experience in the subsequent period. In essence, Indonesia experienced earlier what
other developing countries in Asia have been troubled by more recently.
The adverse impact of the 1997 crisis was visible in Thailand as well, where the private sector credit to
GDP ratio, which peaked at 165.7 per cent in 1997, fell sharply to 96.9 per cent by 2001 and remained close
to that level for a decade. It was only in 2012 and 2013 that the ratio has registered a sharp rise to 121 per
cent, generating once again fears of a bust. In the case of South Korea, on the other hand, lending continued
to rise quite significantly after 1997, with the private credit to GDP ratio increasing from 55 per cent in 1997
to a peak of 148 per cent in 2008, only to decline to 135 per cent in 2013. Banks here have implicitly served
or were used as countercyclical instruments. But now, fears of a household debt crisis have been expressedover the last couple of years, forcing banks to restructure household debt at the instance of the government.
China and India have not as yet taken a hit of the kind the Southeast Asian countries did in 1997,
though they too have been liberalizing their financial sectors. But they have been registering rapid increases
in their private credit to GDP ratios over different periods since 2000. China leads in terms of the level of theratio of credit to GDP and registered a continuous increase in the same except, interestingly, during 2003 to2008 when the ratio fell, precisely during the years when it rose in India. However, bank credit to the private
sector in China exploded since the global financial crisis, as part of the government’s stimulus effort. This has

24

C. P. Chandrasekhar, Finance and Instability in Asia
led to growing concerns about the state of the banking system because of its exposure to the housing market
bubble and to Local Government Financing Vehicles that have borrowed to invest in huge projects without
the appropriate revenue model to meet the interest and amortization commitments involved. As for India,
though the level of its BCPS ratio is much lower than in other Asian emerging markets (except Indonesia),
it too experienced a sharp increase in the ratio during the high growth period between 2003 and 2008. As
a result, signs of stress in bank balance sheets and fears of increased default and speculative bubbles inproperty and other markets now pervade discussion in these two countries as well.
Overall, therefore, while there are significant differences in the volume and growth of bank exposure
to the private sector across Asian emerging markets, they were all confronted with signs of bank fragility
due to overexposure to a few markets such as the retail sector (especially housing), to real estate and capitalintensive projects in infrastructure and industry.
In several of these economies, the difficulties were the result of the internal debt cycle, as the excessive
credit that powered the boom just after the Global Financial Crisis was wound down. Indeed, this problem isincreasingly recognized by many observers of the global economy: a report by Fitch Ratings noted that “Highand rapidly rising private sector debt can have a number of potential adverse effects on economic growth, thehealth of the banking system and sovereign creditworthiness” in emerging markets.
This impact of liberalization on domestic credit was in most cases combined with the fragility
generated by the excess exposure to external debt of the private sector. The September 2014 issue of theQuarterly Review from the Bank of International Settlements (BIS) argued that from the supply side theabsence of adequate yields in developed country markets had resulted in enhanced financial (especially debt)
flows to emerging markets, including those in Asia. The flip side was that corporations in these countries
were overexposed to foreign currency debt and therefore to currency risks. The share of Asian emerging
markets in international bank claims on all emerging markets rose from 30.4 per cent in Q4 of 2008 to 52.5
per cent in Q2 of 2014. External exposure of this kind implies that a depreciation of the currency in anyof these countries can result in stressed corporate balance sheets. And since domestic banks have also lentheavily to these corporations, any balance sheet pressure on corporations could also affect banks adversely.
These feedback loops can give the problem a systemic dimension.
Growing corporate debt became a concern throughout the region, as the debt overhang became one
more reason for private corporations to shy away from new investment and therefore to add to the forces
making for a deceleration of economic activity. Encouraged by access to large volumes of cheap liquidity ininternational markets, resulting from the post-crisis policy of monetary easing adopted by developed country
central banks, firms across developing Asia had gone on a borrowing spree. By 2014 it was evident that they
were increasingly with the problem of stressed balance sheets (BIS Quarterly Review December 2014)
Despite some contraction in bank lending around 2013 resulting from the “taper tantrum”, outstanding
cross-border claims of major international banks reporting to the BIS on non-bank borrowers in the rest of theworld totalled $12.3 trillion at the end of June 2014, which was close to its pre-crisis peak in 2008. Emerging
market economies (EMEs) were important contributors to this increase. As noted earlier the share of Asianemerging markets in total emerging market issuance rose between Q4 of 2008 and Q2 of 2014. And withinemerging Asia, the share of China rose from 20.8 per cent of the total to 53.4 per cent in the same period.

25

IGS Project Series 10
Financialization, Employment, and Gender Inequality
China clearly dominated emerging market borrowing after the Global Financial Crisis, leaving behind Brazil,
India and Korea, who were also important borrowers in that order. Cross-border international claims on Chinarose from $153.5 billion in the fourth quarter of 2008 to $1.1 trillion in the second quarter of 2014, or morethan 7 times in less than six years.
Parallel to these banking developments, non-financial corporates from emerging markets ramped up
their issuance of debt securities, resulting in a total issue of such securities of $554 billion between 2009 and2013. Of that $252 billion, or 45 per cent was mobilised by the issue of debt securities by offshore affiliatesof these corporations. This suggests that non-financial corporations in such developing countries were using
their foreign subsidiaries as financing vehicles, mobilising capital in the local debt markets to transfer funds
to parent firms, or use the capital for financial investments such as loans to other corporates or deposits withbanks or non-bank financial entities in the country of its parent at interest rates that offered a premium above
the low rates prevalent in some international debt markets.
These trends generated two kinds of vulnerability in Asia. The first resulted from the sheer volume
of exposure to debt in forms that provided foreign investors not just the right but the possibility of quick
exit. The second was the massive foreign currency exposure this implied. In the event of any significant
depreciation of the domestic currency relative to the hard currencies in which the original capital wasborrowed, local currency commitments of corporates in the form of interest and amortisation could increasehugely, leading to stressed balance sheets. This process was already underway in 2014. The Financial Times (9December 2014) reported that on 8 December 2014 the JP Morgan Emerging Market Currency Index fell toits lowest level since it first began to be computed 14 years earlier.

Household debtHousehold debt is also an important concern, and one that is likely to become of much more significancein the near future as the financial viability of many personal borrowers comes under question. Herewe consider the specific case of three Asian countries where this problem was particularly evident: China,
Singapore and South Korea. As Chart 1.10 indicates, in all of these countries, total credit to the non-financial
sector grew sharply as percentage of GDP, particularly after March 2009. Furthermore, such debt continued to
grow even beyond mid-2014, despite the evident slowdown of economic growth in these economies, with theratio in the case of China continuing to increase at a relatively rapid rate.
Chart 1.10

→ p.77

Source: BIS database26

C. P. Chandrasekhar, Finance and Instability in Asia

Chart 1.11

→ p.77

Source: BIS database
Household debt grew both as a share of total debt and even more substantially in terms of GDP overthis period. In China, for example, credit to households increased from around 15 per cent of total credit to
the non-financial sector at the end of March 2007 to 18 per cent at the end of March 2015. In relation to GDP
it nearly doubled over the same period, from just below 19 per cent to 37 per cent. In Singapore and South
Korea credit to households has moved more or less in tandem with total credit to the non-financial sector,
but the increase in relation to GDP has been sharper. In Singapore it went up from 39 per cent of GDP at end
March 2007 to 61 per cent at end March 2015. In South Korea the corresponding figures for household debt
were even larger, and increased from 70 per cent to 84 per cent.
Obviously personal or household debt was incurred for a variety of reasons, including life cycle events,
health spending, education (student loans and their sustainability have become a big issue in South Korea),and so on. The purchase of consumer durables such as cars was also one important source of incurring debt.
But by far the single most important cause of household indebtedness, which dominated over all the others,
was the purchase of residential real estate. Indeed, in many societies and certainly in developing Asia, it
has been seen as a form of household saving, as a means of storing wealth even apart from the urge to own
one’s home. This is why the phenomenon of increasing indebtedness has been closely linked to asset market
bubbles, particularly in housing and real estate, but also in stock markets, as discussed in the next section.

The South Korean caseA

fter the 1997 crisis in South Korea, banks that had overexposed themselves to industry, wereincreasingly unwilling to lend to industry, especially to bigger firms that were overgeared. Lending

increasingly diversified in favour of the household sector with banks withdrawing from the business oflending to industry and expanding their exposure to the retail market through consumer and housing loans.
The share of corporate loans in the total fell from 63.8 per cent in 1997 to 43.5 per cent in 2004, and thatof public and other legal entities from 16.3 per cent to 1.4 per cent. The major gainer was household loans
whose share rose from 20 per cent in 1997 to 55 per cent in 2004funds (Table 5.7) (Kim, Kim and Ryoo

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Financialization, Employment, and Gender Inequality
2006).
But this turn in the activities of the financial institutions in the post-crisis period by no means reduced
their proneness to instability. Overlending to the consumer sector had led to difficulties by 2003, when it
emerged that the solvency of some those companies, including credit card companies, were under threat.
By the end of that year the number of credit defaulters exceeded 3.7 million with total credit to households
amounting to US three-fifths of Korea’s GDP (Kim and Lee 2007). According to the Financial Supervisory
Commission this debt crisis was because of the behaviour of the credit card companies including “granting
cards to minors without parental consent, renewal or re-issuance of cards after expiration without the consent
of the member even though no transaction took place in the member account . . . attempts to attract new
members with offers of high-priced giveaways . . . setting credit limits well beyond the card members’ income
or ability to pay only after perfunctory or negligent verification process, and using the offer of high credit
limit as a marketing tool to attract new members.” (Quoted in Kim and Lee 2007: p. 41). Though the target of
lending changed, the tendency towards runaway increases in credit did not.
Table 1.2: Trend of Shares by Sector in Bank Lending1 (%)
Corporate loans
Large companies
SMEs
Household loans
Others2

1997
63.8
25.0
38.7
20.0
16.3

1998
63.6
22.9
40.6
18.3
18.1

1

Excludes trust account lending.

2

Loans to public and other legal entities.

1999
61.9
19.0
42.9
34.3
3.8

2000
56.5
16.3
40.2
39.0
4.6

2001
48.9
10.4
38.4
49.1
2.0

2002
45.5
7.6
38.0
52.9
1.5

2003
45.6
5.9
39.7
53.0
1.3

2004
43.5
5.4
38.2
55.0
1.4

Source: Kim, Kim and Ryoo 2006.
The result was a huge increase in debt especially after 2001, with loans to households rising from 266
trillion won at the end of 2000 to 1,166 trillion won at the end of September 2015 (Charts 1.12 and 1.13).
Debt of households stood at more than 80 per cent of GDP and more than 160 per cent of net household
disposable income in 2014. This was higher than the level that prevailed in the United States before thesubprime crisis broke. Debt of households and Non-profit Institutions Serving Households rose from a little
above 10 per cent of GNP in 2004 to more than 80 per in 2015 (Chart 1.14). According to one estimate(OECD 2014) mortgage loans accounted for around half of household debt. Financial institutions heldback on lending to poorer households and defaulting borrowers, forcing them to turn to consumer financecompanies that lend at higher interest rates, with their average interest rate exceeding 50 per cent in the caseof unregistered entities. The curb market seemed to be returning in Korea.

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C. P. Chandrasekhar, Finance and Instability in Asia

Chart 1.12

Chart 1.13

Source: Thomson Reuters Datastream.
The result was a huge debt burden that could not be easily resolved. According toa survey conductedby Statistics Korea and analysed by the Korea Development Institute, six out of ten households in Korea
were in debt in 2011, and more than a third of them were unable to meet their annual expenses with theirincomes. Debt also weighs heavy on current incomes. One in every 10 households spends more than 40 per
cent of annual income on servicing that debt.
With these households having to borrow more to stay afloat and others joining their ranks, a large
proportion of households could be caught in a debt trap that would force default. Already, a significant
proportion of households in Korea has more liabilities than assets and cannot therefore clear dues by selling
assets. In case of widespread default the banks that lent to them will not be able to recoup even a part of theirloans, leading to systemic problems of the kind that Asian emerging markets seemed to have been insulated
from.An implication of this has been the collapse of the household savings rate in what used to be a highsaving nation: from more than 15 per cent before the 1997 crisis to around 10 per cent in 2000 and a low of29

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2-3 per cent recently. Increasingly, instead of saving for the future, South Korean households are consumingout of what they hope would be tomorrow’s income.
Chart 1.14

Source: Bank of International Settlements at www.bis.org
Thus, while it is indeed true that traditionally banks in South Korea tended to “overlend” to the private
sector, financial liberalization has led to important changes. Before the 1997 crisis, banks were substantiallypublicly owned and their lending to the private sector was focused on the then successful South Korean
corporations. Problems began when in the 1990s South Korea chose to open up and deregulate its financial
sector, partly as a quid pro quo for continued access to international markets on which its growth was based,
partly to diversify into services led by finance because of a growing loss of manufacturing competitiveness,and partly to meet the requirements set for OECD membership. The process, which increased the role offoreign finance in the South Korean economy also led to a shift of lending away from productive investmentthat had been the main target of directed credit till then, into sectors like the stock market, real estate andhousing. That shift was financed with low-cost foreign finance, accessed in large measure by the private
sector in South Korea, and directed less to the productive sectors and more to non-tradable services with astrong speculative component. This created the circumstances in which South Korea became vulnerable to theboom-bust cycles typical of foreign financial flows and to the contagion that spread across the region in 1997.
Interestingly, post-crisis adjustment in South Korea (and elsewhere in Southeast Asia) did not lead tothe reversal of the liberalisation that enhanced the external vulnerability of a successful “miracle” economy
and increased the fragility of its financial system. Rather, the role of the IMF during and after the crisis andthe success of foreign finance resulted in the government opening the doors wider to foreign capital anddiluting regulation of the domestic financial sector, even while taking over and guaranteeing repayment of
the debt that foreign finance had, without due diligence, provided the domestic private sector. As Chart 5.1
shows, South Korea’s external debt rose sharply between 2005 and 2014.

30

C. P. Chandrasekhar, Finance and Instability in AsiaThus, both before and after the crisis, “overborrowing” by the private sector remained high, but thetarget borrowers were now engaged less in productive activity and more in areas like finance, real estateand housing. Moreover, after the crisis, bankrupt financial firms were displaced or taken over by new
players, especially foreign firms. This led in turn to the importation into the country of the practices that
had characterised finance in the developed industrial countries. Prime among them was a sharp increase inlending to the retail sector—housing, automobile purchases and personal credit—with the risk associatedwith such fragmented, large scale lending being concealed by pooling credit assets, securitising these bundles
and transferring the risk. The net result is that in this third phase, even though lending to the private sector
continued to be important in South Korea, households have been replacing corporates as leading borrowers.
South Korea had transited from debt-financed investment through debt-financed speculation to an era ofdebt-financed consumption. Needless to say, a little of each of these was visible in all periods, but the shift inemphasis was clear.
Excess borrowing is also a result of the adverse impact that the growth pattern after liberalisation
has had on the distribution of income in the country. While developed country status has increased the costof living and the consumption aspirations of the population, incomes among the poorer sections of the
population have not kept pace. In the event, as occurred in the US, encouraged by an easy credit environment,
the poor have sustained their consumption and diversified into new economic activities with the aid of credit.
As the survey of household finances quoted earlier found, while the top 20 per cent also borrowed, theproportion of borrowers in the bottom quintile in terms of income was increasing the fastest. Moreover, while
the rich borrowed to acquire real estate, the poor did so to just make ends meet.
The government and the Bank of Korea are conscious of the dangers implicit in this excessive debt
overhang. The danger of massive default on such debt, which could have precipitated another major crisis,
forced the government to step in and set up an 800 billion won fund to buy distressed household debt
from the banking sector at a discount and restructure or write off a significant part of that debt. In 2011thegovernment launched a programme to “induce the soft landing of household debt. According to the OECD(2014), since 2008 debt restructuring programmes “have assisted nearly one million delinquent borrowers,
helping to reduce the number from 2.3 million in 2008 to 1.1 million, which is still about 5% of households.
The most important programme is the National Happiness Fund, which writes off up to 70% of debt andinterest.”
The government has also responded with measures to reduce bank exposure to the retail market and to
induce borrowers to shift out of floating rate loans to fixed interest loans. The intention is to reduce the impactthat any interest rate shock would have on borrowers under strain and unable to meet their debt service
commitments. However, with financial liberalisation having created a layered financial system, this did not
resolve the problem. Stricter bank regulation may rein in borrowing for speculation by the rich. But the poor,
who cannot but borrow, have turned to the non-banking system: mutual associations and credit unions, inparticular, which are unregulated and charge exorbitant interest rates. That only worsens the problem.
The South Korean experience thus indicates how some financial liberalisation can lead to crisis,and such crises can in turn generate political economy tendencies for further liberalisation rather than reregulation of finance. The consequences tend to be adverse for both growth possibilities and financial

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fragility, and point to the lack of sustainability of this particular trajectory.

Asset market bubbles in indebted AsiaThe link between household indebtedness and real estate markets emerges very clearly from Chart
1.12, which describes the movement of average residential prices between 2007 and 2015 in the three

countries considered above, that is China, Singapore and South Korea.
Chart 1.12

Source: BIS database on real estate prices
In all of these countries, house prices showed a dip – in the case of Singapore a severe dip – in theaftermath of the Great Recession. However, thereafter they recovered sharply, often actively aided andabetted by government policies that sought to create incentives for personal house purchases as a meansof stimulating economic recovery and boost the construction sector. As a result, real estate experienced aboom that was largely fuelled and financed by growing household debt, and construction became one of themost “dynamic” economic sectors in the growth of these economies. However, as we now know from theexperience of far too many countries, such debt-driven real estate bubbles eventually come to an end, often
painfully.
The recent financial crises in the United States, the United Kingdom, Ireland, Spain and so on were allpresaged by declining house prices, especially as some borrowers who could no longer service their debt wereforced to default and so more houses started being sold in distress conditions. Once this process starts, thedecline in value of the underlying collateral renders more such debt unviable, as other householders realizethat selling the assets will not necessarily be sufficient to repay the loan. And this can then have a domino
effect on financial institutions that have provided such credit.
The inevitable bursting of the real estate bubble began around 2013. In Singapore house prices peakedin the middle of 2013, and have been falling since then. In China the downturn occurred a year later, in the
middle of 2014, but after falling for four quarters residential real estate prices appeared to have stabilized, due
to very active intervention by the Chinese government. In South Korea, house prices rose rapidly at first and32

C. P. Chandrasekhar, Finance and Instability in Asia
then were stagnant, but policy moves in 2015 were designed to keep them rising – even if only to postpone
the inevitable decline – because so much of household capacity to repay would be affected by major declines.
A significant fallout of the dependence on external finance can be unwarranted asset price inflation instock markets. For example, there was an artificial explosion in the ratio of market capitalization to GDP (Chart
1.13) in various Asian markets in the 2000s, which largely resulted from trading in the secondary market.
The IPO market (or the section of the stock market that serves as a source of capital to finance corporate
investment) was still limited and highly volatile in terms of volumes mobilized in these markets, and did
not serve as a facilitator of corporate investment. Asset price inflation occurred partly because of inflows offoreign capital into secondary markets that were both narrow (in terms of the number of companies whose
shares were listed and actively traded) and shallow (in terms of the number of shares of these companies
available for trading after taking account of the holdings of promoters and long-term investors).

Chart 1.13

Source: World Bank World Development Indicators online, accessed 1 September 2015

Changes in important macroeconomic variablesIn many of these countries, the post crisis trajectory has been marked by something rather unusual:domestic investment rates fell even as domestic savings rates remained high. So they stopped being net

recipients of foreign savings and instead showed the opposite tendency of net resource outflow, as domestic
savings were higher than investment. This meant that there was a process of squeezing out savings from the
population as a whole but not investing it within the economy to ensure future growth. Instead, these savings
were effectively exported, either through capital outflows or by adding to the external reserves of the central
banks, which were typically held in very safe assets abroad (such as US Treasury Bills).
Consider Malaysia and Indonesia, two economies in the region that exhibit this tendency very clearly,
and both of which were a little more than a year ago were lauded as emerging markets with significant
future potential. Charts 1.14 to 1.16 show the experience of Malaysia while Charts 1.17 to 1.19 illustrate the33

IGS Project Series 10
Financialization, Employment, and Gender Inequality
Indonesian pattern. These are very different economies, with somewhat different initial positions, varying
political trajectories and even dissimilar economic policies over the entire period. Yet they share some basic
similarities, from the emphasis on export orientation in the pre-Asian crisis boom as well as subsequently, tothe financial liberalisation that was already present to some extent in the 1990s but gathered pace thereafterand particularly after 19998, when both countries also made significant commitments to the WTO in termsof liberalising financial services. Both of them had rising investment rates that were generally higher than thealso increasing savings rates in the run-up to the Asian crisis.
Thereafter, investment rates fell sharply in both countries, and have remained low in Malaysia even as
savings rates have ruled high. In Indonesia there has been some recent recovery of investment rates but only
just managed to reach and exceed the savings rates two years ago. Meanwhile, investment rates have shown
little relationship with financial indicators like stock market capitalisation and credit to the private sector.
In other words, the recent financial boom that has been associated with these “emerging markets” has nottranslated into real investment increases. Very significantly for present purposes, the processes of structuralchange in both economies seems to have been stalled or even reversed, with industry (and manufacturing)
shares of value added and employment remaining stagnant in Indonesia and actually falling in Malaysia. Bearin mind that these changes occurred at much lower levels of per capita income than occurred even in South
Korea and certainly as per the experience of the currently advanced economies of the West.
So even as these economies actually became more “open” in policy terms, especially with respect
to rules regarding foreign investment, and were celebrated as “emerging markets”, they stopped being net
recipients of foreign savings and instead showed the opposite tendency of net resource outflow, as domestic
savings have been higher than investment. This was in turn associated with both lower rates of growth thanpreviously as well as lower investment rates and reduced impetus towards the desired change in productive
structures and sectoral diversification. The entire process was accompanied by a greater reliance on attempts
to induce growth through debt-driven bubbles, by encouraging expansion of consumer debt and housing
finance, even though these are necessarily time-bound and self-limiting engines of growth and have now
already run their course.
Chart 1.14

Source: World Bank WDI online

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C. P. Chandrasekhar, Finance and Instability in Asia

Chart 1.15

Source: World Bank WDI online

Chart 1.16

Source: World Bank WDI online

Chart 1.17

Source: World Bank WDI online

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Chart 1.18

Source: World Bank WDI online

Chart 1.19

Source: World Bank WDI online
This shows that that financial liberalisation can do more than simply create sharp and painful economic
shocks for the residents of the country – they can also alter longer-term economic trajectories in unfortunate
ways. An important fallout has been that the project of the developmental state, which was such an essential
feature of economic progress in the region in the past, has effectively been abandoned.

Deflation and developmental effects
forceful critique of financial liberalization relates not only to the enhanced possibility of crises, but theAargument that it has a clear bias towards deflationary macroeconomic policies and forces the state to

adopt a deflationary stance to appease financial interests. To begin with, the need to attract internationallymobile capital means that there are limits to the possibilities of enhancing taxation, especially on capital.
Typically, prior or simultaneous trade liberalization has already reduced the indirect tax revenues of states
undertaking financial liberalization, and so tax-GDP ratios often deteriorate in the wake of such liberalization.

36

C. P. Chandrasekhar, Finance and Instability in Asia
This then imposes limits on government spending, since finance capital is generally opposed to large fiscal
deficits. This not only affects the possibilities for countercyclical macroeconomic stances of the state but also
reduces the developmental or growth-oriented activities of the government.
Financial interests are against deficit-financed spending by the state for a number of reasons. To
start with, deficit financing is seen to increase the liquidity overhang in the system, and therefore as being
potentially inflationary. Inflation is anathema to finance since it erodes the real value of financial assets.
Second, since government spending is “autonomous” in character, the use of debt to finance such autonomous
spending is seen as introducing into financial markets an arbitrary player not driven by the profit motive,
whose activities can render interest rate differentials that determine financial profits more unpredictable. If
deficit spending leads to a substantial build-up of the state’s debt and interest burden, it is possible that the
government may intervene in financial markets to lower interest rates with implications for financial returns.
Financial interests wanting to guard against that possibility tend to oppose deficit spending. Finally, since
financial interests privilege the role of markets, the presence of the state as regulator and the interventionist
activity of the state can be seen as delegitimising the role of finance, which is another reason why thefinancial markets tend to prefer reduced government deficits.
In sum, liberalization can dismantle the very financial structures that are crucial for economic growth.
While the relationship between financial structure, financial growth and overall economic development iscomplex, the basic issue of financing for development is really a question of mobilising or creating real
resources. In the old development literature, finance in the sense of money or financial assets came inonly when looking at the ability of the state to tax away a part of the surplus to finance its development
expenditures, and the obstacles to deficit-financed spending, given the possible inflationary consequences if
real constraints to growth were not overcome. By and large, the financial sector was seen as adjusting to therequirements of the real sector.
In the brave new world, however, when the financial sector is increasingly left unregulated or coveredby a minimum of regulation, market signals determine the allocation of investible resources and therefore
the demand for and the allocation of savings intermediated by financial enterprises. This can result in the
problems conventionally associated with a situation where private rather than overall social returns determine
the allocation of savings and investment. It aggravates the inherent tendency in markets to direct credit tonon-priority and import-intensive but more profitable sectors, to concentrate investible funds in the hands ofa few large players and to direct savings to already well-developed centres of economic activity. The sociallydesirable role of financial intermediation therefore becomes muted.
This certainly affects employment-intensive sectors such as agriculture and small-scale enterprises,
where the transaction costs of lending tend to be high, risks are many and collateral not easy to ensure.
The agrarian crisis in most parts of the developing world is at least partly, and often substantially, related
to the decline in the access of peasant farmers to institutional finance, which is the direct result of financial
liberalization. Measures which have reduced directed credit towards farmers and small producers havecontributed to rising costs, greater difficulty of accessing necessary working capital for cultivation and otheractivities, and reduced the economic viability of cultivation, thereby adding directly to rural distress. In
India, for example, there is strong evidence that the deep crisis of the cultivating community, which has been

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associated with to a proliferation of farmers’ suicides and other evidence of distress such as mass migrations
and even hunger deaths in different parts of rural India, has been related to the decline of institutional credit,
which has forced farmers to turn to private moneylenders and involved them once more in interlinked
transactions to their substantial detriment.
It also has a negative impact on any medium term strategy of ensuring growth in particular sectors
through directed credit, which has been the basis for the industrialisation process through much of the20th century. In a large number of developing countries in the past, the financial structure was developed
keeping in mind its developmental instrumentality. Financial structures were therefore created to deal withthe difficulties associated with late industrial entry: capital requirements for entry in most areas were high,because technology for factory production had evolved in a capital-intensive direction from its primitive
industrial revolution level; competition from established producers meant that firms had to concentrate on
production for a protected domestic market or be supported with finance to survive long periods of low
capacity utilisation during which they could find themselves a foothold in world markets. Not surprisingly,
therefore, most late industrializing countries created strongly regulated and even predominantly statecontrolled financial markets aimed at mobilising savings and using the intermediary function to influence thesize and structure of investment. This they did through directed credit policies and differential interest rates,
and the provision of investment support to the nascent industrial class in the form of equity, credit, and low
interest rates.
By dismantling these structures financial liberalization destroys an important instrument that
historically evolved in late industrializers to deal with the difficulties of ensuring growth through thediversification of production structures that international inequality generates. This implies that financial
liberalization is likely to have depressing effects on growth through means other than just the deflationary
bias it introduces into countries opting for such liberalization.

38

Makoto Itoh, Comments on two papers

Comments

Comments on two papers ‘Financial Crisis and the Economic
Conditions of Women’ by Professor Jayati Ghosh and ‘Finance andInstability in Asia’ by Professor Chalapurath P. Chandrasekher
presented for a Symposium at Ochanomizu University (Institute for Gender Studies), 2016.4.11.
Makoto Itoh (Professor Emeritus of the University of Tokyo)F

rom two papers, I learned interesting problems on financial instability, its impact on employment, andwomen’s economic conditions in the contemporary world especially in Asia. Let me comment on each

paper three issues mainly from a view of Japanese experiences, and add another separate point thereafter.
On the first paper by Professor Ghosh;(1) The different effects of sub-prime financial crisis on men and women workers.
Women workers statistically seem affected less than men both in unemployment rates and in wage
gender gaps. The author analyses that these facts originate from the socially gender biased structure of
employment. Men were dominantly employed in financial and export-oriented industries with higher wages,
whereas women were mainly in tertiary industries with lower wages. The financial crisis hit clearly theformer than the latter. He also stress that women’s economic life was generally not improved but rather
became unstable and harder as their jobs became more in the various forms of irregular employment, and also
as their burden of unpaid work was added due to cuts of welfare policies.
This impressive analysis suggests that the different effects of financial crisis on men and women are
deeply related to the background trend of socio-economic structural changes in our age of neo-liberal global
capitalist development since the 1980s, which mobilized more and more of women to market labor besidetheir nom-market labor, especially in tertiary industries, with lowly paid unstable irregular wages. As sucha trend is exactly working also in Japan, we have to reconsider together how to overcome such a series oftrends in our age.
(2) The vulnerability of export-oriented growth and recovery in Asian economies.
The paper clarifies that the export-oriented recovery and growth trajectory in Asian economies
after the Asian crisis of 1997-98 worked suppressive on domestic consumption, and resultantly made these
economies vulnerable in the process of the subprime global crisis. This point is applicable also to Japanese
economy. As its recovery depended on export for several years until 2007, with rather deflationary domestic

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demand, resulted in the worst macro-economic performance in a decline of real growth rate among the major
economies, despite of its relative stability in the financial institutions. The point implies that much moredomestic-oriented recovery strategies are surely necessary and desirable.
(3) What to think of the contents of Keynesian fiscal policies.
Thus the paper underlines the necessity of more positive Keynesian fiscal stimulus policies rather than
the neo-liberal austerity policies in order to restore stable macro-economic balance. However it shows certain
worries about Chinese fiscal stimulus spending mainly on public expenditure, allocating just less than 4% forhealth care and education. It appreciates more the case of Sweden and Argentina as models more desirable
for treating women and younger generation such as educational and vocational guidance together with othersocial welfare measures.
We can add the case of Japanese unsuccessful decades of spending policies mainly for public
expenditure by piling up huge amount of state debt more than twice of GDP, while cutting down budget
for education and health care against need. Although Keynes himself believed in fiscal policy for public
expenditure as an effective recovery measure, we have to doubt why it cannot work well in our age. Is it
because the big business in general construction now using more of heavily automated machinery becameless effective in generating employment by receiving demand for public expenditure? At least the initial
phase of Japanese Democratic Party government born in 2009 after the subprime shock, following US Obama
government, tried rather successfully a series of policies shifting ‘form concrete-cement to human-being’,
including providing child-allowance without means-tests, and a sort of green-recovery policy in a form of
eco-point system for purchasing eco-conscious electric appliances, cars, and houses, and managed to cause
a wide recovery in 2010. However the government was pushed back in 2011, troubled deeply by the greatearthquake, giant tsunami, and the disastrous accident at the Fukushima atomic power plant, and could notcontinue such policies..
On the second paper by Professor Chandrasekher;(1) What did financial liberalization positively result in Asian countries?
This paper strongly demonstrates that financial liberalization in Asia since the 1980s resulted inmostly negative effects; such as increased vulnerability, difficulties to use the financial system for state-led
development or industrial policies, and the increased susceptibility to the external financial shock like thesubprime crisis. Although these effects must be true and serious, there must be also positive side of effects inrelation with increased inflow of foreign capital especially in the form of direct foreign capital investment,
promoting high economic growth with expanding employment in many Asian emerging countries.
Such positive effects as a trend in this period of neo-liberalism seems obvious from a view of thecontrasting accelerated industrial hollowing out and stagnant trend in advanced economies including Japan.

40

Makoto Itoh, Comments on two papers(2) Why Japan did opt for financial liberalization?
This paper explains four sources of pressure on Japanese government to opt for financial liberalization;
Japanese firms’ multi-nationalization, lobbying by international financial institutions, these external agents’request to dilute the special relationship between the government, the financial system and the corporate
circle, and fourthly together with Japanese financial institutions, these external agents demanded for greater
flexibility in operation (p.4). Although these factors must actually have worked, I feel that US and otherexternal pressures are overrated.
Behind the effects of these pressures from outside, there was also a fundamental internal shift in thefunctions of Japanese banking system since the end of high-economic growth period until 1973. In the higheconomic growth period, Japanese banks used to serve to industrial businesses by continuously supplying
massive loans so as to promote their massive capital investment, forming a typical indirect over-loan bytransmitting saving fund from households to industrial growth. After the end of high-economic growth,
Japanese big industrial corporations became more and more self-financed, by reducing debt, and accumulated
more of retained earnings, as real capital investment to plant and equipment reduced down. Thus Japanesebanks had to find new operations to utilize idle fund more flexibly in capital market (to purchase directly or
indirectly shares and public bonds), lending to smaller businesses, consumer credit and expanding multinational financial operations, and thus moved for financial liberalization. The result was that the Japanesefinancial system also became much more speculative and insecure as the paper points out as a common
tendency in contemporary Asian financial system.
We read in this paper (p.18-23) that in Asian emerging economies, the aggregate debt of non-financial
sector is increasing including corporate debt. Comparison of statistical data on corporative debt between
Japan and other Asian economies must be interesting if available.
(3) Financialization of labor-power?
In retrospect, the modern financial system in capitalist societies in general used to concentrate loans
to business firms, leaving out consumer credit to the hands of more traditional old types of money-lenders
and pawnshops the peripheral area of finance. However, it is interesting to observe in our age of neo-liberal
globalization, modern banks began to expand consumer credit to promote markets for consumer durables,such as cars and houses. Such a trend started from advanced economies including Japan, and came into Asianemerging economies as well, as this paper analyses after p.23. In Korea, one every 10 households spends
more than 40% of income on serving such a debt (p.27).
Upon the ground of commodification of labor-power, capitalism in our age expands financializationof labor-power so as to exploit workers of their wage income in addition to exploitation in the labor process.
The subprime crisis well shows how this financialization of labor-power added to vulnerability or innercontradiction of capitalist financial system, as well as in mass of workers’ economic life.
There is an interesting issue what impacts do this financialization of labor-power give women’s
economic life. Is there gender discrimination in treating housing loan? Did it promoted women to get jobs inmarket? In what ways did it deepen women’s double burden both in market and outside of market?

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Ideas for 21st century models of alternative paths
Let me add another point which may also worth discussing together concerning 21st century models ofsocial democracy and socialism.
In my reading both authors are conscientious left Keynesian, taking care of issues how to improve
economic difficulties among weaker people with warm heart. I am fully sympathetic to such a spirit, especially against neoliberal policies believing just in competitive market principles. Against neoliberalism, both
papers suggests alternative desirable positive state policies of 21st century models of social democracy, suchas a shift from mere public expenditure to social welfare, as a recovery strategy. We are witnessing increasing popularity of B. Sanders in USA, J. Corbyn in UK, and P. Iglesias in Spain, and expect a global sign for
a new tide for socialism in a broad sense against neoliberalism containing such a renewed policy programs.
Please let me hear if there is any information on this.
More specifically, in contrast to 20th century models of social democracy and socialism which expected nation state to work for redistribution in an egalitarian orientation, 21st century models of them must, in
my view, have wider glass- roots often more localized various attempts to reconstruct social solidarity andmutual assistance from below. For instance, Mayor of Seoul Park Won-Soon initiated international Global
Social Economy Forum (GSEF) in 2013 upon his practice in Seoul City, in order to promote social economy
based on workers cooperative unions and other forms of non-profit regional organizations in cooperation withthe local governments for the more humanistic future. Similar intention is found now in various local social
movements to form local currencies, organization for local production and consumption, green-recovery strategies, sometimes liked with expectation for local administrations to act for recovery of local communities.
Probably we should reconsider such ideas for the 21st models of social democracy and socialism, including
various possibilities for more decentralized forms of micro-finance like Grameen banks.
I shall be happy if my comments can serve as suggestions for fruitful discussion in this symposium.

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Mariko Adachi, Closing Remarks

Closing Remarks
足立眞理子（IGS 教授）

本日は、たくさんの皆様の御参加をいただきありがとうございました。まずは、ジョヨッティ・ゴーシュ先生、チャンドラシーカー先生、そして、コメントをお引き受けいただきました伊藤誠先生、今回のシンポジウムをサポートしてくださった横川信治先生に御礼を申し上げます。

金融化とジェンダーという課題は、2008 年グローバル金融危機以降、ジェンダー分析、フェミニスト経済学において、その重要性が改めて認識されてきた。たいへん難しく、たいへん重たいテーマといえます。
とくに、ジェンダー研究所 IGS においては、2011 年にお茶大で、UNDP との共催による国際シンポジウ
ムが開催されました際に、イギリス・エセックス大学のダイアン・エルソン教授が、生産領域・再生産領域（sphere of production, sphere of reproduction）に並んで、金融領域（sphere of finance）のグローバル化とジェ
ンダーという問題の重要性を指摘されました。それ以降、金融危機とその弥縫策としての更なる金融緩和、
一方での社会保障費削減をターゲットとする財政緊縮策によって、各国、各地地域におけるマクロ経済の問題と、その影響が、ジェンダー非対称的に出てくるということへの分析が進んできたと思います。
本日のジョヨッティ・ゴーシュ先生、チャンドラシーカー先生のお話は、とりわけ 2000 年代に急速に進められた、アジアにおける金融の自由化、雇用の規制緩和―チャンドラシーカー先生は、これをアングロ・
サクソン型への同型化とおっしゃっていると思いますが―、と相まって、アジアの各国経済への影響の違いが、鮮明になってきており、経済成長と見える現象が、ファイナンスされた個人消費によって牽引されている経済の脆弱性をご指摘になられました。
その際に、非常に重要であるのは、雇用の規制緩和による、ジェンダーへのインパクトが異なることです。
危機の回復当初は、正規雇用についていた男性のリストラとして現象化し、男性不況（men recession）と呼ばれたのですが、その後、失業を免れた女性の雇用条件は低賃金のままに維持され、家計の主たる収入源としての負担が高まりました。その中での、金融危機による、ダメージの回復のために財政手段を用いる、つまり税金による穴埋めのために、一方では消費税を柱とする増税と、他方では赤字財政の危機をあおることによる社会保障費削減に結びつく財政緊縮という、負担の増大が企図されるのです。
そこで問題なのは、この間、フェミニスト経済学が明らかにしてきたことは、財政緊縮政策は、女性に与える負の影響が強いということです。何故なら、公共サービスや社会福祉関連は女性への関連が強く、そこでの財政支出がカットされた場合、それが生活の必要を充足しなければならないのであれば、女性の43

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アンペイドワークがさらに強化され、負担の増大によって充当、補填されるからです。
翻って、日本において、現在、アベノミクスの成果が真に問われております。待機児童を抱えつつ高齢者のケアを行ない、非正規の雇用や派遣によって就労し、金融危機後の経済立て直しがさらなる金融緩和で進められる中、金融資産は預貯金で株式投資には縁がないか素人に過ぎず、一方で赤字財政の名のもとに、消費増税が是認される。この中で、もはや、金融政策だけでは限界があるという、あまりにあた
りまえの批判がメインストリームからも出始めております。
財政支出が真に考慮されるべきは、旧来型の箱モノではなく、女性がアンペイドワークによって下支えし、担ってきた保育や介護、教育などの再生産領域であることは明白です。なぜなら、そこにこそ、人間の生活の実存があるからです。
本日の、金融化・雇用・ジェンダー不平等のシンポジウムが、ここにこそ届くことを、切に要望いたします。
長時間、ありがとうございました。

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Yukiko Nakamura Symposium Report

Symposium Report on IGS website2016 年 4 月 11 日（月）、ジェンダー研究所主催による「金融化、雇用、ジェンダー不平等」というテーマで国際シンポジウムが開催された。新年度が始まったばかりの日程での開催であったが、多くの参加者を得て、活発な議論が交わされた。司会は、板井広明氏（本学）がつとめ、開催趣旨と登壇者の紹介が行われた。
一人目の登壇者、ジョヨッティ・ゴーシュ氏（インド、ジャワハルラール・ネルー大学）は「金融危機と女性の経済的状況」という題目で、ジェンダー化された経済危機の影響とマクロ経済政策について論じた。
女性労働者は景気の調整弁や家計補助的労働力として見做されてきたため、経済危機においては男性労働者とは異なった影響を蒙ったことを 2000 年代以降の統計データより示した。特に、無償労働が資本蓄積のために決定的に重要な役割を果たしていることには留意すべきで、マクロ経済政策によって有償労働と無償労働の配分は変化する。2008 年以降の経済危機への対応政策はジェンダー視点を考慮せず、公共事業の増大と緊縮財政策による失業率上昇と社会保障費削減は、女性が無償労働を強化して家計の不足分を補填しなくてはならない状況をもたらした。一方で、福祉支出の拡大や雇用創出、最低賃金などの上昇といったジェンダー・センシティブな経済危機対策をとったスウェーデンやアルゼンチンでは、比較的早期に金融危機からの脱却と生産と雇用の回復を遂げた。危機からの回復には、雇用の強化と社会保護の拡大が要であり、マクロ経済政策はその中心に女性と労働者の状況改善を据えるによって乗数的に有益な影響が創出され、さらなる経済活動の拡大が生まれ、持続可能な経済成長、より公正な発展、社会的緊張の減少が可能になるだろうとまとめた。
次の登壇者であるチャンドラシェーカー氏（インド、ジャワハルラール・ネルー大学）は「アジアにおける金融と不安定性」と題して報告を行った。1970 年代半ばに始まる金融自由化の波は、アジア地域においては 1991 年の国際収支の危機と 1997 年の金融危機を誘発し、1990 年以降、資本の流入を伴うグローバルな金融統合化が進行して、アジアの金融制度はアングロ・サクソン型となった。しかし、1997 年のアジア通貨危機以降、多くの国では、大量の外貨準備高が危機への対応策と見なされるなどしたため、経済発展のためのリソースを十分に活用できなかった。また金融危機の影響とその対応は各国で異なり、1997 年危機では危機直後から世帯と政府の債務削減が開始されたのに対して、2008 年危機では、国内外の借入金の増大や累積債務の増加となった。2015 年までに香港、シンガポール、中国、韓国などのアジア諸国／地域の銀行信用の GDP 比は、米英よりも高いレベルになったが、外国資本による民間主導の成長や減税、企業合併が進み、金融政策の効果の実体経済への影響は限定的か確認できない状況である。このように、金融化を軸にした経済成長はマクロ経済的管理の問題を抱えつつ、アジア諸国に脆弱性をもたらすものだった。これらのことを踏まえ、持続可能で安定的な経済の実現には、金融資本の規制が重要であると主張した。

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討論では、伊藤誠氏（東京大学名誉教授）が、ゴーシュ報告に対して、第 1 に経済危機において女性の雇用と家事労働の増大という二重負担の指摘は重要で、その論理をより丁寧に考察する必要性がある
点、第 2 にアジア地域の経済が構造的に脆弱性をもち、より内需依存型経済にして安定性を得ることが女性にとっても重要である点、第 3 に危機対応としてはインフラ整備（コンクリート）よりも社会保障（人間）が重要であり、現代的ケインズ政策もその内容が問われることを指摘した。チャンドラシェーカー報告については、第 1 に投資を社会的にコントロールしなければ資本主義としても機能しないのではないかという点、第 2 に日本の金融自由化は外圧のみでなく大企業を中心として自己金融化が進行した結果であるとも考えて金融自由化を捉える必要があること、第 3 にアジア諸国における消費者金融の拡大という現象は、旧来の資本主義における労働力の商品化から、労働力の金融化という事態への推移を象徴しているもので、そのことのジェンダー的意味を問うことが重要ではないかとコメントされた。最後に女性の力も含めた草の根の相互扶助的なもの（協同組合や地域通貨など）や社会的経済を、ケインズ的国家政策と相反しない形で模索できるのではないか、それが 21 世紀型の社会民主主義であると指摘された。
報告者からの応答では、ゴーシュ氏は、伊藤氏の 21 世紀型社会民主主義のローカル・モデルには全面的に賛意を表するとした上で、そこでは女性の生産的労働の貢献が評価されておらず、無償労働の再分配も課題にあがっていないので、女性の参画を推し進め、男性支配的文化を変革する必要性があるとコメン
トした。チャンドラシェーカー氏は、金融活動の収益率が生産活動の収益率を上回り、帝国主義的膨張が不可能になると国内的なバブルが発生することを資本主義の本質と指摘し、金融に代わる人間の生活 =福祉を中心とした経済の在り方を考えていく必要があるとした。また、新しい社会主義や社会民主主義に関連して、草の根活動の重要性を認めつつも、国家が主導権をもって金融を管理し、新たな銀行制度を構築する重要性を喚起した。
クロージングでは、足立眞理子氏（本学）が本シンポジウムでの議論を総括した。金融化とジェンダーという課題は、2008 年グローバル金融危機以降、フェミニスト経済学やジェンダー分析において、その重要性が認識されてきた。とくに雇用の規制緩和によるジェンダーへのインパクトが異なること、すなわちジェンダー非対称的な現われである。また 2 報告でも触れられたように、危機後の財政緊縮策が女性に対して負の影響が強いのは、女性の無償労働をより強化し、負担を増大させることによって社会的再生産を充当せざるをえなくさせるからである。現在の日本では金融危機後の経済立て直しがさらなる金融緩和を通じて進められるなか、女性は待機児童を抱えつつ高齢者のケアを行い、非正規雇用や派遣によって就労する。そして多くの人が金融資産と言えば預貯金で、株式投資には縁がないまま置き去りにされ、赤字財政の名のもとに消費税増税が是認される状況への批判は、主流派からもでてきている。財政支出が真に考慮されるべきは、旧来型の箱モノではなく、女性が無償労働によって下支えし、担ってきた領域であることは明白である。そこにこそ人間の生活の実存があるからであり、「金融化・雇用・ジェンダー不平等」を議論した本シンポジウムが、そこにこそ届くことを要望すると結んだ。
金融化が進行し経済が不安定化する世界において生じている新しい課題に対して、オルタナティブな社
会の在り方とそのための施策を真摯に展望する姿勢が印象的なシンポジウムであった。

（記録担当：中村雪子

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立教大学ジェンダーフォーラム

教育研究嘱託員）

Jayati Ghosh
Economic crises and women’s work

Power Point Slides

Jayati Ghosh

Economic crises and women’s work: Exploring
progressive strategies in a rapidly changing global
environment

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Economic crises and women’s work

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Economic crises and women’s work

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Economic crises and women’s work

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Economic crises and women’s work

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Jayati Ghosh
Economic crises and women’s work

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Economic crises and women’s work

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Jayati Ghosh
Economic crises and women’s work

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Finance and instability in Asia

C. P. Chandrasekhar

Finance and instability in Asia

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Finance and instability in Asia

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Finance and instability in Asia

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Finance and instability in Asia

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Finance and instability in Asia

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Finance and instability in Asia

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Finance and instability in Asia

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Finance and instability in Asia

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国際シンポジウム「金融化、雇用、ジェンダー不平等」
International Symposium“Financialization, Employment, and Gender Inequality”
編集担当：板井広明
Edited by Hiroaki Itai
発行：お茶の水女子大学ジェンダー研究所〒 112-8610 東京都文京区大塚 2-1-1
Published by Institute for Gender Studies, Ochanomizu University
2-1-1 Otsuka, Bunkyo-ku, Tokyo 112-8610, Japan
Tel: 03-5978-5846
igsoffice@cc.ocha.ac.jp
http://www2.igs.ocha.ac.jp
発行：2017 年 3 月
Issued in March, 201779〒112-8610 東京都文京区大塚2-1-1
お茶の水女子大学ジェンダー研究所
Institute for Gender Studies, Ochanomizu University
Tel. 03-5978-5846

Fax. 03-5978-5845

2-1-1 Otsuka, Bunkyo-ku, Tokyo 112-8610 Japan
igsoﬃce@cc.ocha.ac.jp
http://www2.igs.ocha.ac.jp