A talk of interest to COR community…
“Borrowing Credibility: Global Banks and Monetary Regimes.”
Professor Jana Grittersova
University of California, Riverside
Friday, January 25, 2019
Social Science Plaza A, Room 2112
*Graduate students are encouraged to meet with Prof. Grittersova immediately following her talk in SSPB 5226, 3:30-4pm.*
Nations with credible monetary regimes borrow at lower interest rates in international markets and are less likely to suffer speculative attacks and currency crises. Whereas scholars typically attribute credibility to either domestic institutions or international agreements, I argue that when reputable multinational banks, headquartered in Western Europe or North America, open branches and subsidiaries within a nation, they can enhance its monetary credibility. Such multinational banks enhance credibility in several ways. First, they promote financial transparency in the local financial system. Second, they improve the quality of banking regulation and supervision in host countries. Finally, the banks serve as private lenders of last resort. Reputable multinational banks provide an enforcement mechanism, ensuring that publicized economic policies will be carried out. I examine actual changes in government behavior in nations trying to gain legitimacy in international financial markets and the ways international perceptions of these nations change because of the presence of multinational banks. I test my credibility theory by combining statistical analyses of more than eighty emerging market economies over the period from 1995 to 2009 with comparative case studies of credibility building in Estonia, Bulgaria, the Czech Republic, Poland, Argentina, and Ukraine, as well as the global financial crisis of 2008 drawing upon 120 field interviews. The book illuminates the complex interactions between multinational banks and national policymaking that characterize the process of financial globalization and reveals the importance of market confidence in a world of mobile capital.
Bio: Jana Grittersová is an associate professor of political science and a cooperating faculty in the Department of Economics at the University of California, Riverside. She received her Ph.D. in Government from Cornell University and a Ph.D. in Economics from the University of Economics in Bratislava, Slovakia. She has previously taught at the University of California, Berkeley and Stanford University, and has worked at the European Commission in Brussels and the central bank of Slovakia. Her published and ongoing research focuses on the sources of government reputation in international markets, political perceptions of monetary policy, the impact of interest groups on monetary and financial policies, global banking, the role of non-market coordination in financial-system development, and the political economy of reform. Her book Borrowing Credibility: Global Banks and Monetary Regimes (University of Michigan Press, 2017) explores how countries with new histories, failed economic policies, and weak institutions establish monetary credibility in international financial markets. She has received grants from the Austrian Marshall Plan Foundation, the Russel Sage Foundation, the Andrew W. Mellon Foundation, the American Political Science Association, and the British Chevening award, among others.