Paradigmatic mediation : globalization and banking policy reform in Malaysia and the Philippines

Abstract

This thesis' central interest is in the relationship between globalizing changes to the external environment of Third World states' banking policies and these policies' origins and central role in statist-nationalist policy paradigms. Given that these paradigms serve foundational regime legitimation functions, external pressures for globalization create a strong and ongoing "outside-inside" tension between pressures for liberalizing banking policy change to match its evolving external environment and paradigmatic pressures for statist-nationalist banking policy continuity. Prior to the mid-1980s, banking policy's external environment tolerated the Third World's statist-nationalist banking policy status quo, since the mid-1980s, this external environment has shifted sharply to encouraging globalizing, liberal policy reform. The globalization of banking policy's external environment has an identifiable starting point, concrete mechanisms of globalization, and clear, multiple effects on individual states' statistnationalist banking policies. The central research question is why after having very similar, statist-nationalist banking policies did Philippine banking policy change in line with banking policy's globalizing external environment since the mid-1980s, while Malaysia's remains resolutely statist-nationalist despite intense external pressures for globalizing policy change? Using a punctuated equilibrium model, this thesis argues that changes to dominant policy paradigms have determined banking policy change and continuity. Banking policy's globalized external environment contributed to a paradigmatic shift in the mid-1980s in the Philippines towards a liberal, technocratic paradigm that triggered liberal banking policy reform. In Malaysia, the state has been able to maintain its dominant statist-nationalist paradigm and its statist-nationalist banking policies. The Philippine state's fiscal weakness exposes its dominant statist-nationalist paradigm to banking policy's external environment, while the Philippines' loose political system and fluid state structure facilitated paradigmatic change. The Malaysian state's fiscal strength insulated its dominant statist-nationalist paradigm from its external environment, while the centralized political system and state structure facilitates robust paradigmatic defence in the face of growing external pressures.