13 See Lewis (2014) for a fascinating account of the rise of high-frequency trading in the
US.
14 Many DFIs aim to attract private investment into countries and sectors with high potential
impact by demonstrating that profitable investments can be made, with acceptable levels
of risk.
15 Projects in developing countries are generally assumed to be riskier, such that debt investors
demand a higher proportion of equity, which is essentially a form of collateral from their
perspective. Debt/equity ratios are thus more like 60/40 (IRENA, 2012).
16 For a flavour of investors’ perceptions on these issues, see Parhelion and Standard & Poor’s
(2010).
17 See Piketty (2014) for a rationale and detailed suggestions for wealth taxes.
18 In most countries, as well as globally, the ‘factor’ shares going to labour have steadily
declined since the 1960s at least (Glyn, 2009). Recent debates on stagnating or falling
real wages are thus only the most recent manifestations of this longer term trend.
19 It is estimated that 97 per cent of money in circulation in the UK today has been created
in this way (Greenham et al., 2012).
20 See NEF (2010) for a comprehensive ‘manifesto’ along these lines.
21 In a 2013 survey in the European Union access to finance was cited as the most pressing
problem by 40 per cent of SMEs in Cyprus, 32 per cent in Greece, 23 per cent in Spain
and Croatia, and 20 per cent in Italy, Ireland and the Netherlands. It was mentioned
least in Germany (8 per cent), Austria (7 per cent) and Luxembourg (6 per cent) (European
Commission, 2013).
22 As well as the global financial crisis of 2007–2008, the financial instability hypothesis
describes very well the Asian financial crisis of 1997, where international bank lending
became increasingly short term.
23 This process led to the demise of Northern Rock, the first UK bank failure in 150 years.
24 The Glass–Steagall Act was passed in 1933 and finally repealed in 1999 after decades of
lobbying by the financial sector. See Crawford (2011) for a history and account of the
impact of the repeal of Glass–Steagall on the global financial crisis of 2007–2008.
25 Maxfield (1991) argues that the interests of finance are more likely to be reflected in
policy where an effective ‘bankers alliance’ of private financiers and central bankers has
developed. Where this is the case, monetary policy will remain tight – with negative
impacts on the real economy – and government intervention in the financial system will
be minimized.
26 See Femia (1983) or Hirschman (1989), for example. See Pagano and Volpin (2001) for
a review.
27 Other perspectives on financial structure stress the role of legal origins (La Porta et al.,
1998). From this perspective, countries with an English common law, rather than a French
civil code tradition are more likely to have stronger protection for creditors and minority
shareholder rights. As a result, financial sector development, particularly with respect to
capital markets, will tend to be more advanced. Another school of thought sees
differences in financial structures in developed countries – particularly ‘arm’s-length’
Anglo-Saxon models with large capital markets, versus systems based on ‘relationship
banking’ in Germany and Japan – as more a matter of cultural and deep-rooted political
differences between countries (Roe, 2003).
28 Arcand et al. (2012) show that the impact of the financial sector on growth becomes
negative when private sector credit exceeds 110 per cent of GDP. In 2012, the figure
was 176 per cent for the UK and 184 per cent in the US (WDI).
29 World Bank’s World Development Indicators.
Financing green transformations 169
US.
14 Many DFIs aim to attract private investment into countries and sectors with high potential
impact by demonstrating that profitable investments can be made, with acceptable levels
of risk.
15 Projects in developing countries are generally assumed to be riskier, such that debt investors
demand a higher proportion of equity, which is essentially a form of collateral from their
perspective. Debt/equity ratios are thus more like 60/40 (IRENA, 2012).
16 For a flavour of investors’ perceptions on these issues, see Parhelion and Standard & Poor’s
(2010).
17 See Piketty (2014) for a rationale and detailed suggestions for wealth taxes.
18 In most countries, as well as globally, the ‘factor’ shares going to labour have steadily
declined since the 1960s at least (Glyn, 2009). Recent debates on stagnating or falling
real wages are thus only the most recent manifestations of this longer term trend.
19 It is estimated that 97 per cent of money in circulation in the UK today has been created
in this way (Greenham et al., 2012).
20 See NEF (2010) for a comprehensive ‘manifesto’ along these lines.
21 In a 2013 survey in the European Union access to finance was cited as the most pressing
problem by 40 per cent of SMEs in Cyprus, 32 per cent in Greece, 23 per cent in Spain
and Croatia, and 20 per cent in Italy, Ireland and the Netherlands. It was mentioned
least in Germany (8 per cent), Austria (7 per cent) and Luxembourg (6 per cent) (European
Commission, 2013).
22 As well as the global financial crisis of 2007–2008, the financial instability hypothesis
describes very well the Asian financial crisis of 1997, where international bank lending
became increasingly short term.
23 This process led to the demise of Northern Rock, the first UK bank failure in 150 years.
24 The Glass–Steagall Act was passed in 1933 and finally repealed in 1999 after decades of
lobbying by the financial sector. See Crawford (2011) for a history and account of the
impact of the repeal of Glass–Steagall on the global financial crisis of 2007–2008.
25 Maxfield (1991) argues that the interests of finance are more likely to be reflected in
policy where an effective ‘bankers alliance’ of private financiers and central bankers has
developed. Where this is the case, monetary policy will remain tight – with negative
impacts on the real economy – and government intervention in the financial system will
be minimized.
26 See Femia (1983) or Hirschman (1989), for example. See Pagano and Volpin (2001) for
a review.
27 Other perspectives on financial structure stress the role of legal origins (La Porta et al.,
1998). From this perspective, countries with an English common law, rather than a French
civil code tradition are more likely to have stronger protection for creditors and minority
shareholder rights. As a result, financial sector development, particularly with respect to
capital markets, will tend to be more advanced. Another school of thought sees
differences in financial structures in developed countries – particularly ‘arm’s-length’
Anglo-Saxon models with large capital markets, versus systems based on ‘relationship
banking’ in Germany and Japan – as more a matter of cultural and deep-rooted political
differences between countries (Roe, 2003).
28 Arcand et al. (2012) show that the impact of the financial sector on growth becomes
negative when private sector credit exceeds 110 per cent of GDP. In 2012, the figure
was 176 per cent for the UK and 184 per cent in the US (WDI).
29 World Bank’s World Development Indicators.
Financing green transformations 169