'What is patient capital and who supplies it?'

Iain Hardie, Richard Deeg

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

In comparative political economy (CPE), ‘patient capital’ (‘PC’)– primarily from relational banks – as 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 determining patience though three questions: 1. Is the investment (loan) intended to be short or long term? 2. Is the investor engaged with management in pursuit of short-term share price performance or creditworthiness? 3. 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
Number of pages19
JournalSocio-Economic Review
Issue number4
Early online date2 Oct 2016
Publication statusPublished - 30 Oct 2016

Keywords / Materials (for Non-textual outputs)

  • corporate finance
  • financial institutions
  • financial markets
  • comparative political economy
  • varieties of capitalism


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