Rethinking Critical Juncture Analysis Institutional Change and Liberalisation in Chinese Banking and Finance

Presented by: Professor Stephen Bell (POLSIS/UQ) & Dr Hui Feng (Griffith University)

China’s stimulus and credit surge in response to the 2008 Global Financial Crisis marked a turning point or critical juncture which questioned existing growth models and China’s state-directed credit and banking system. The subsequent growth of the informal shadow banking sector as an institutional work-around amounts to China’s version of ‘banking reform’; a classic ‘informal institutional adaptation’ in the shadow of hierarchy. We analyse these developments using historical institutional theory arguing that existing theory, and especially its accounts of critical junctures, cannot adequately capture or explain the key dynamics in play. The current approach has a limited, temporarily specific account of institutional change, overlooks the importance of changes on either side of the critical junctures, and is unable to integrate its emphasis on critical junctures with alternative accounts, such as incremental accounts of institutional change. These problems clearly call for a fresh approach which is able to bridge these theoretical divides.


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