The rise and fall of state banking in OECD countries

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.