Financialisation and the Malaysian Political Economy

Abstract

This paper argues that taking a short-term look at Malaysia's response to the financial crisis of 1997–1998 does not adequately assess the socio-economic transformation that was propagated by the crisis. Most importantly, it falls short of accounting for the shift from a bank-based to a capital market-based financial system that occurred in post-crisis Malaysia and the ensuing increasing financialisation of Malaysian capitalism. This shift has significantly affected both corporate and individual financial cultures and led to the emergence of a new politics of debt. It coincides with rising levels of household indebtedness. Moreover, it has set in motion a metamorphosis of the institutions set up to govern Malaysian capitalism.

Este artículo afirma que al observar a corto plazo la respuesta de Malasia a la crisis financiera de 1997–1998, no se logra evaluar la transformación socioeconómica que generó la crisis. Aún más importante, no logra explicar el cambio de un sistema financiero con base en la banca a un sistema con base de mercado de capitales, cambio que se dio durante la post crisis en Malasia, generando un incremento de la financiación del capitalismo. Este cambio afectó significativamente tanto a la cultura financiera individual, como corporativa y condujo al surgimiento de nuevas políticas de endeudamiento. Coincidió con el incremento del nivel de endeudamiento de los hogares. Es más, condujo a la metamorfosis de las instituciones establecidas para regir el capitalismo de Malasia.

Keywords:

• political economy
• Malaysia
• Asian capitalisms
• financialisation
• debt

Acknowledgements

The author would like to thank Ben Clift, Mark Beeson, Timothy Sinclair, and the three anonymous reviewers for their help with and comments on earlier versions of this paper.

Notes

See also New Straits Times, 19 April 2007. See Henderson and Phillips (2007) for a more general account of the problems faced by SMEs.

Bank Rakyat offers Islamic financial products, mainly targeted at bumiputeras. In April 2009, it was absorbed by the Ministry of Finance.

The Edge Daily, 30 July 2008.

Unfortunately, disaggregated statistics on Malaysian household debt are not publicly available.

For more information, see http://www.akpk.org.my/SuccessStories/tabid/40/Default.aspx.

The Star, 2 February 2008, http://www.thestar.com.my.

Bernama, 20 April 2008, http://www.bernama.com.my.

New Straits Times, 21 and 22 April 2008, http://www.nst.com.my.

Bernama, 20 April 2008, http://www.bernama.com.my.

Bernama, 20 April 2008, http://www.bernama.com.my.

New Straits Times, 21 April 2008, http://www.nst.com.my.

Bernama, 11 July 2009, http://www.bernama.com.my.

Bernama, 22 October 2008, http://www.bernama.com.my.