State banking is the intervention of the state in the allocation of credit.
State banking became important during the course of this century in some O
rganization for Economic Cooperation and Development (OECD) countries but n
ot in others and then declined in the 1980s. Why? State banking was demande
d by sectors that were pressed to invest but that could not find access to
long-term credit because of the marginal importance of small and local bank
s in countries with centralized market and state institutions. The class cl
eavage enabled these groups to extract state banking from central governmen
ts thanks to their pivotal role in the Right-Left rivalry. The current demi
se of state banking reflects the shift from class to territorial modes of i
nterest articulation in capital markets.