International capital mobility and domestic institutions: Corporate finance and governance in four European cases

This article considers the impact of international capital mobility on the character of corporate finance and corporate governance in four European co untries (Germany, France, Spain, and Italy). We take issue with the widespr ead view that the growth of international financial markets and the lifting of capital controls will in themselves produce convergence in national sys tems of corporate finance non governance. Although we find evidence of conv ergence in specific aspects of financial regulation (e.g., the abandonment of selective credit regulation and the dismantling of barriers to universal banking) these regulatory changes have not produced any clear convergence toward either the Anglo-Saxon model of corporate finance and governance pre dicted in much of the literature or the alternative German bank-based model . The reasons for this, we suggest, have much to do with the way in which t he politics of financial reform are likely to differ from those postulated in market-driven models of regulatory change cr,ld the fact that countries ave susceptible to international pressures in different ways.