Introduction: What is Patient Capital, and Where does it Exist?

Iain Hardie, Richard Deeg, Sylvia Maxfield

Research output: Contribution to journalSpecial issuepeer-review


In comparative political economy (CPE), ‘patient capital’ (‘PC’)—primarily from relational banks—is central to distinguishing national economies. The rise of ‘market-based banking’ highlights the growing inability of commercial banks to be patient.This raises the question of whether alternative forms of PC exist, but CPE lacks a framework to consider PC provision by financial markets. We develop our concept of PC and a framework for determining the investors most likely to provide it—and under which conditions. We define PC as equity or debt whose providers aim to capture benefits specific to long-term investments and who maintain their investment even in the face of adverse short-term conditions for the firm. We argue for deter-mining patience though three questions: (a) Is the investment (loan) intended to be short or long term? (b) Is the investor engaged with management in pursuit of short-term share price performance or creditworthiness? and (c) What is the likelihood of exit because of concerns regarding short-term performance? Our framework lays the cornerstones for a new comparative theory of financial systems.
Original languageEnglish
Pages (from-to)627-645
JournalSocio-Economic Review
Issue number4
Early online date2 Oct 2016
Publication statusE-pub ahead of print - 2 Oct 2016


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