My dissertation explores the emergence of what are typically referred to as "public banks". Traditionally, public banks are defined as banks in which a government owns a majority of bank assets. Their utility and performance as compared with private banks is by now well debated and studied: to what extent do they help serve new markets (such as green energy investments or unbanked populations), resolve market failures (such as financial crisis), or create new inefficiencies altogether (such as politically motivated investment)? However, few if any studies offer a systematic analysis of when and why governments pursue their formation in the first place. I advance an alternative conceptualization of public banks that focuses the lens of analysis on the process by which they emerge, rather than as pre-defined objects of analysis. That is, I define them as: banks that are formed or taken over by governments and in which governments maintain a degree of control (what I call government-initiated public banks, or "G-Pubs"). This conceptualization helps contextualize G-Pub origins politically and historically. I further construct an original dataset tracking the formation of G-Pubs, which includes over 1,200 banks and spans the period 1401-2021. This dataset includes, and greatly expands upon, existing public banks data. Using this dataset, I address long-held assumptions of prior research and examine the origins and diffusion of G-Pubs through descriptive evidence, theory development, and empirical testing.
Case-Ruchala, Devin (2022). "An old novel idea: Introducing an original dataset of G-Pub formation." (Supplementary Information). Invitation to revise and resubmit at Review of International Political Economy.
Why do governments become involved in the banking sector by directly controlling bank activity through ownership or managerial control—i.e. by forming what are typically called public banks? A lack of data allowing systematic study of public bank formation has hindered research on this question. This paper introduces an original dataset and yields important empirical insights. I focus my analysis and data collection on what I call “government-initiated public banks” (G-Pubs), or those banks that are formed or taken over by governments and remain under government control. The dataset, compiled from several existing datasets and qualitative sources, includes 1,236 banks across 191 countries and spans the period 1401-2021. The dataset sheds light on the historical trajectory of government formation of public banks, from their deep historical roots in 15th century Europe to their subsequent international diffusion along with state and market expansion across varied regime types and economic systems up through the neoliberal era. I discuss my data collection methodology, including important conceptual considerations, and present descriptive summaries of the data that challenge a now centuries-old debate while providing pathways for future cross-disciplinary research.
Case-Ruchala, Devin. "A Paradox of Openness: Democracies, Financial Integration & Crisis." Invitation to revise and resubmit at Review of International Organizations.
Why do democracies experience financial crises more often than non-democracies? I argue that an answer to this question requires consideration of the way domestic institutions inhere in system-level structures, and I introduce the mechanism of co-regime financial connections. I first show that regime type is an important systematic feature of global financial flows by employing a latent space network regression model using IMF Coordinated Portfolio Investment Survey (CPIS) data available beginning in 2001. I find that the network of cross-border portfolio asset investments is systematically patterned by co-democracy pairs. I then show that this regime-patterned interdependence has an effect on increased financial crisis susceptibility and diffusion. I find that the prevalence of crises among democracies since the turn of the twenty-first century results in part from these co-democracy investment relationships. My findings build on literature highlighting the interdependence between domestic- and system-level factors, pointing to the interdependence between regime type and global financial flows in explaining financial crisis.
Case-Ruchala, Devin and Nance, Mark (2021). "Discipline without punishment: illicit finance, blacklisting, and the ideational sources of compliance in global financial governance." (Supplementary Information).
How important are ideas in global financial governance? To help answer this question, we present findings from mixed-methods research into a most-likely case for materially driven enforcement: the Financial Action Task Force (FATF) blacklists as a tool of the anti-money laundering and counter-financing of terrorism regime. Practitioners and scholars often expect the blacklists to inflict financial harm, inducing compliance with FATF standards. In statistical analyses of four different global financial flows, we are unable to establish a systematic effect of listing. Relying on expert interviews, we trace bank decision-making and find the lists’ impact is diminished by two key factors: the existence of multiple, competing lists and banks’ access to more finely-grained, client-specific information provided by third party companies. Ultimately, we argue that compliance with FATF standards is driven by a mistaken belief in the financial impact of blacklisting, pointing to the ideational underpinnings of enforcement.
Case-Ruchala, Devin. "Hurry up or wait: Public bank formation in the 20th century."
Public banks are a demonstrated powerful policy tool to overcome market failures such as by meeting the needs of under-financed sectors or smoothing increasing economic disruptions associated with the COVID-19 pandemic and climate change. Yet existing literature offers little insight into what leads to their emergence in the first place. I provide the first general theory and cross-sectional analysis of the formation of public banks, or what I more precisely term "government-initiated public banks" ("G-Pubs"). I argue that throughout the 20th century, state formation operates as a "historical cause", the contextual circumstances of which lead to two distinct and self-reinforcing patterns of G-Pub formation: 1) serial formation when state formation occurs along with disruptions to the private financial sector and political support for economic nationalism; or 2) irregular formation when these conditions are absent but subsequent financial crises and policy advocates create specific demands for G-Pubs. I rely on paired case studies and an original bank-level dataset to provide evidence for my theory and against "constant cause" rival explanations. My analysis contributes to a broader literature on the political economy of finance by examining an understudied tool of government financial management and yields implications for G-Pub formation in the 21st century.
Case-Ruchala, Devin, Julia Morse, and Mark Nance. “Where, When, and Why? An Examination of the Financial Consequences of Blacklisting.”
Under what conditions do market actors react to international blacklisting? We consider this question in the context of the Financial Action Task Force (FATF), which uses blacklisting to encourage compliance with its international standards on combating illicit financing. Existing research, including our own, comes to conflicting conclusions about blacklisting's systematic impact on financial flows. To bridge this divide, we theorize that blacklisting negatively affects market flows in a subset of contexts, but that such effects receive significant media and policymaker attention, which in turn influences how governments view the listing process. We test this theory through a mixed-methods approach that examines the list’s impact on cross-border banking liabilities and remittances. We begin by identifying jurisdictions with financial flows that appear most disrupted by the FATF list, and then test hypotheses about how the nature of the listing process, country characteristics, and the banking industry moderate such relationships. We pair this with qualitative analysis assembled from interviews of bureaucrats from listed countries and financial professionals. The results better specify the conditions under which blacklisting is likely to affect a target’s jurisdiction, and shed light on the impact of blacklists as a general tool of global governance.
Case-Ruchala, Devin and Melina Tobías. “The multi-level politics of public banks funding public water: FONPLATA and water access in Buenos Aires, Argentina.” (Book chapter). Part of a broader research project, Public Banks + Public Water, organized by the Municipal Services Project, funded by a Social Sciences and Humanities Research Council Canada Insight Grant, and headquartered at the Global Development Studies department at Queen's University. See here for a primer on the broader Public Banks + Public Water research project.