Patterns of Financialisation: A Multimethod Study of Banking Regulation in Canada

Abstract

In this thesis I ask if financialisation – the increasing influence of the financial sector – may cause a dual effect of increased economic growth and decrease wage share of total income. I operationalise financialisation as financial deregulation and test its effects utilising a nested analysis. The results from a regression on OECD-member states from 1991 to 2005 indicate that credit controls as a specific category of financial deregulation decreases economic growth and that deregulation of banking supervisory agencies increases the wage share of total national income. Canada’s Bill C-67 of 1999, deregulating foreign bank entry, is selected as the case to be studied in-depth based on the regression results. I then conduct process tracing on theorised mechanisms of foreign bank entry in Canada. I find that foreign bank entry in Canada brought economic growth through foreign direct investment. I also find that the wage share of total national income was reduced from credit-led growth and finance-led growth, both of which were results of foreign bank entry.