If one is to assess the efficacy of the banking liberalization using the economic efficiency standards of liberalized markets, then it was a failure. It did not bring down the cost of money, did not narrow intermediation spreads (the gap between bank borrowing, i.e., deposit rates, and lending rates), and did not increase the supply of loanable funds to the cash-strapped economic groups and sectors, including agri-business and venture capitalists/entrepreneurs. Under the relatively-constricted terms of financial liberalization, the new banks came in only to cater to the already competitive but still lucrative high-end corporate market.
This lack of potency can only be explained satisfactorily by the mangling of the terms and the intent of the banking liberalization law. To the extent that the law hewed closely to the preferences of the financial oligopolists, then it signifies another notch up their sleeves. To the extent, however, that new players have come in and may be able to offer significant competition in the future, then the law can be considered a skillful compromise as well as an opportunity for thorough-going financial openness. The future course of events is, of course, an empirical matter that could not be settled in this paper. One can only speculate and perhaps hope for a more competitive financial regime that can offer cheaper credit to all fund users but still able to afford investors with respectable yields and acceptable risks.
- Books and Journal Articles
“Liberalization and the Transformation of the Philippine Economy.” Governor’s Page, CB Review 44(4): 1-2.
Alesina, Alberto and Guido Tabellini. 1989. “External Debt, Capital Flight, and Political Risk.” Journal of Development Economics 27(2): 199-221.
Andrews, David. 1994. “Capital Mobility and State Autonomy: Towards a Structural Theory of International Monetary Relations.” International Studies Quarterly 38(2): 193-218.
De Dios, Emmanuel. 1996. “Resource Mobilization and Industrial Organization.” In Financial Sector Issues in the Philippines, pp. 55-82. Edited by Raul Fabella and Kazuhisa Ito. Tokyo: Institute for Developing Economies.
Frieden, Jeffrey. 1991. “”Invested Interests: The Politics of National Economic Policies in a World of Global Finance.” International Organization 45(4): 425-51.
_____________and Ronald Rogowski. 1996. “The Impact of the International Economy on National Policies: An Analytical Overview.” In Internationalization and Domestic Politics, pp. 25-47. Edited by Robert Keohane and Helen Milner. Cambridge University Press.
Haggard, Stephan and Chung H. Lee. 1995. Financial Systems and Economic Policy in Developing Countries. Ithaca: Cornell University Press.
Haggard, Stephan and Sylvia Maxfield. 1996. “The Political Economy of Financial Internationalization in the Developing World.” In Internationalization and Domestic Politics, pp. 209-39. Edited by Robert Keohane and Helen Milner. Cambridge University Press.
Hutchcroft, Paul.1998. Booty Capitalism: The Politics of Banking in the Philippines. Quezon City: Ateneo de Manila University Press.
Goodman, John and Louis Pauly. 1993. “The Obsolescence of Capital Controls? Economic Management in an Age of Global Markets.” World Politics 46(1): 50-82.
Kurzer, Paulette. 1991. “Unemployment in Open Economies: The Impact of Trade, Finance and European Integration.” Comparative Political Studies 24(April): 3-30.
_______________. 1993. Business and Banking: Political Change and Economic Integration in Western Europe. Ithaca: Cornell University Press.
Lee, Chung H. and Stephan Haggard. 1995. “Introduction: Issues and Findings.” In Financial Systems and Economic Policy in Developing Countries, pp. 1-27. Edited by S. Haggard and C. H. Lee. Ithaca: Cornell University Press.
Mendoza, Amado Jr. 1995. “Who’s Wagging the Dog?: State, Rent-Seeking and Finance in South Korean NIC-hood.” Kasarinlan 11(1-2):149-174.
______________. 1996. “Democracy and Economic Growth: What’s in Store for South Korea?” Kasarinlan 12 (1): 45-70.
Montes, Manuel and Johnny Noe E. Ravalo. 1995. “The Philippines.” In Financial Systems and Economic Policy in Developing Countries, pp. 140-81. Edited by S. Haggard and C. H. Lee. Ithaca: Cornell University Press.
Nam, Sang-woo and C. H. Lee. 1995. “Korea.” In Financial Systems and Economic Policy in Developing Countries, pp. 31-55. Edited by S. Haggard and C. H. Lee. Ithaca: Cornell University Press.
Pauly, Louis. 1988. Opening Financial Markets: Banking Politics on the Pacific Rim. Ithaca: Cornell University Press.
Rosenbluth, Frances. 1989. Financial Politics in Contemporary Japan. Ithaca: Cornell University Press.
Suleik, Mercedes. 1992. “Banking and Financial Reforms in the Philippines (Part 2).” CB Review 44(1):13-17.
Winters, Jeffrey. 1994. “Power and the Control of Capital.” World Politics 46(4): 419-52.
World Bank. 1988. Philippines: Financial Sector Study. Industry and Energy Operations Division, Country Department II.