Unpacking the Financial Community’s Influence Over Central Bank Policy in South Africa and Turkey

• In Event: 282 - Regular Session. Economic Sociology. Financial Globalization

Abstract

This paper examines the increased economic and political power of finance in developing countries, and its growing influence over economic decision-making at state institutions. Such influence is widely discussed in the last two decades, especially in the financialization literature. Yet, how to conceptualize the ways in which financial power operates and how it can be measured remains underspecified. This paper analyzes the central bank as the primary domestic site of financial influence. It uses interviews, public texts and economic data to answer two questions: (1) To what extent does empirical evidence support claims that the financial community has growing influence over central bank policy? (2) How can we explain different levels of financial influence over central bank policy? This research focuses on the South African Reserve Bank (SARB) and the Central Bank of Turkey (CBT), and one global finance center, London. It compares the policies of SARB and CBT after these central banks gained independence in 2000 and 2002 respectively, with a specific emphasis on the post-2008 Global Financial Crisis period. This paper aims to contribute to the growing sociological literature on the rise of finance by providing a unique conceptualization of how ‘financial interests’ are communicated to central bankers; the processes and mechanisms through which financial groups exercise influence over central bank policy and how this influence could be operationalized and measured.

Author

• Ayca Zayim, University of Wisconsin-Madison