Financialization and the Emergence of the Eurozone Crisis: a Comparative Capitalism Perspective

Abstract

The article provides an explanation of the Eurozone crisis by focusing on the process of financialization that interacts in different ways with diverging varieties of capitalism. By doing this it contributes to the emerging discussion on country-specific variations of financialization and their interactions. The strongly increasing importance of the financial system has led—together with the abolition of the exchange rate risk—to a strongly increasing private indebtedness in the Southern Eurozone economies and to the emergence of a consumption-driven growth regime. It has developed a symbiosis with the export-driven German growth regime, as far as parts of the demand created have benefitted the German export sectors and German banks have become important providers of credit in the Southern Eurozone. The reduction of credit provision after the global financial crisis has led to the stagnation of the Southern economies.