Banking competition, speculation and financial instability: a heterodox reading of the recent evolution of the international financial system.

Summary The purpose of this paper is to show that the transformations of the competitive environment of banks, cause and consequence of the recent financial and monetary changes, have contributed to exacerbate speculative activities at the national and global level and to increase the risk of a systemic crisis. In the first part of the thesis, an analytical theoretical approach is developed based on the contributions of Keynes and other heterodox authors who highlight the importance of money and banking for the understanding of economic dynamics in a world of uncertainty and irreversibility. The specific nature of banking competition and the effects of banking behavior on the stability of the economy are emphasized in an approach that takes into account the special role of banks in the modern capitalist economy where these private profit-oriented institutions are responsible for the creation of money. For this reason, banks are subject to strict state regulation, but they always try to escape from it. There is thus an insurmountable contradiction between the banks' relentless quest for value and the regulators' goals of stability. Because of the dual and dialectical nature of banks, bank competition is at the center of financial instability and credit dynamics. Driven by competitive logic, banks act in ways that amplify the financial instability that is part of the capitalist economy. In the second part, these theories are used in the analysis of the mutations of the bank in the 1980s and 1990s. This thesis attempts to show that the recent evolution of banking has not led to a higher stage of financial development of the capitalist economy. In a context of financial deregulation associated with government policies of "competition" (in the neoclassical sense of the term), banks have adopted certain competitive strategies that have led to a greater fragility of some national banking systems and have also favored the rise of speculative activities at the expense of the financing of productive investment.