State-owned banks and development: Dispelling mainstream myths

Thirty years of neoliberal restructuring have side-lined alternative financing practices, and propagated mainstream myths about state-owned banks. This chapter examines these neoliberal claims, arguing instead that state-owned banks can remain a crucial part of progressive, sustainable and democratic strategies for investments in long-term development and infrastructure. Drawing on past and present case studies, as well as the theoretical literature on finance, the chapter points to the potential to revive - and improve - state-owned banking as a viable option for financing public services and development. To this end the chapter dispels nine popular neoliberal claims about state-owned banks while discussing how state-owned banks have undergone neoliberal restructuring processes such as marketization and corporatization in ways that nonetheless challenge their status as 'public' banks. To illustrate, the chapter looks at imperfect, but telling or inspiring, examples from Brazil, China, Costa Rica, India, South Africa, Turkey and Venezuela, among others.