Against (the idea of) financial markets Brett Christophers Department of Social and Economic Geography, Uppsala University, PO Box 513, Uppsala 75120, Sweden article info Article history: Received 21 April 2015 Received in revised form 15 September 2015 Accepted 18 September 2015 Keywords: Finance Markets Banks Financial systems Disintermediation abstract The difference between bank-based and market-based financial systems is a longstanding and influential conceptual staple of the interdisciplinary literature on finance. This dualistic model has been subjected to wide-ranging critiques over the past decade. Yet, while those critiques productively problematize the relationship between banks and markets presumed by the model, they fail to address the underlying dis- tinction between banks and markets that is also presumed by the model. This article questions that dis- tinction. It argues that financial markets are best understood not as places or platforms where banks and other financial actors come to interact – and thus as essentially separate from banks – but, instead, as, in large part, their interaction; as constituted by it. The article further argues for the political as well as scholarly importance of reconfiguring our ideas of what financial markets are. The idea of markets as sep- arate, reified phenomena not only underpins the scholarly model of bank- and market-based financial systems – it does political work in the wider world, with the appeal to financial markets or, more nebu- lously, ‘‘the market” to rationalize and justify political decision-making having become a commonplace of contemporary public policy discourse. Ó 2015 Elsevier Ltd. All rights reserved. 1. Introduction A conceptual mainstay of the vast interdisciplinary literature on finance has long been the basic distinction between bank-based and market-based financial systems. In a stylized bank-based sys- tem, banks represent the primary conduits and directors of finan- cial flows. Corporations secure financing from banks; and those banks play the dominant role in aggregating savings, allocating capital, and managing financial risk. In a market-based system, banks are much less prominent, although not absent. Financial markets, rather than banks, are the principal sources of financing for corporations and serve as society’s main vehicles of capital allo- cation and financial risk management. In the literature in question, these two alternative models are commonly used to describe and classify the financial systems of different countries. During the past decade, a variety of criticisms have been lev- elled at this dualistic figuring of financial systems (e.g. Adrian and Shin, 2010; Allen et al., 2004; Hardie et al., 2013; Song and Thakor, 2010). This article seeks to deepen and extend this critique. It does so by problematizing a distinction that the existing critique has failed adequately to question, but which is nonetheless funda- mental to the bank-based versus market-based dualism. This is the underlying, prior distinction between banks and markets per se. At the heart of the differentiation between bank-based and market-based financial systems is the premise that banks and mar- kets belong to different orders of things – that they are ontologi- cally distinguishable. On the one hand there are things called markets; on the other hand there are banks (or, more generally, financial institutions). To be sure, the two can and do interrelate: banks and other financial institutions are said to be active in finan- cial markets, alongside other economic actors. But, the very notion that one (the bank) can operate in or on the other (the market) implies separability and difference. Indeed, if banks and markets were not essentially different things, then it would be pointless to categorize financial systems on the singular basis of the distinc- tion between them. The article suggests that this distinction relies on and repro- duces a problematic notion of what financial markets are and of what happens in them, and it argues for an alternative figuring of markets, particularly vis-à-vis their relations with banks and other financial institutions. In the literature on financial systems, and in most critical readings of it, markets are depicted as sites where competitive and chiefly anonymous economic transactions occur. But it is misleading to think of financial markets this way. First, even in nominally market-based financial systems, banks and other financial institutions frequently wield substantial influ- ence, manifesting inter alia as power over and hence the capacity to ‘‘move” the very markets whose prominence – according to the stylized model – ostensibly obviates systemic bank promi- http://dx.doi.org/10.1016/j.geoforum.2015.09.011 0016-7185/Ó 2015 Elsevier Ltd. All rights reserved. E-mail address: brett.christophers@kultgeog.uu.se Geoforum 66 (2015) 85–93 Contents lists available at ScienceDirect Geoforum journal homepage: www.elsevier.com/locate/geoforum