Bank-industry Networks and Economic Evolution

Using Schumpeter's theory of economic evaluation as a starting point, the text gives an outline of an institutional-evolutionary theory of institutional change, innovation, and financial systems, based on learning-by-financing within bank industry networks - such as Japanese keiretsu groups or Swedish ownership spheres. The book aims to answer three questions: how does learning-by-financing within bank industry networks influence the quality upgrading of the economic process? How do bank-industry networks evolve through evolutionary selection as bankers and entrepreneurs interact? What conditions are crucial for the evolutionary viability of the universal bank as network bank in securitized economy? The author develops a set of models to outline a theoretical explanation of why bank-industry networks around a universal bank are viable as an institutional form for industrial banking in the securitized economy. The book concludes that learning-by-financing within bank-industry networks may increase innovativation and thereby the quality upgrading of the economic process. Bank-industry networks around universal banks seem to be viable also in a securitized economy, because learning-by-financing and network commitment keep the value of information higher than the value of diversification.