Out of Many, Many: Variation in East Central Europe Financial Governance Despite the EU's Single Market

Abstract Following the global financial crisis, European financial authorities introduced a host of new initiatives intended to advance market integration, improve the quality of bank oversight and enhance both economic stability and prospects for growth. Earlier research found that the Banking Union and Capital Markets Union's potential to channel funding for growth to East Central Europe (ECE) markets was limited. We show further that within the framework of the European Single Financial Market, ECE states have introduced diverse financial policies to try to increase funding to domestic firms and promote industrial and technological upgrading. Through a survey of the ECE region and then a closer examination of Hungary, Poland and Slovakia, we show a spectrum of activism, developmentalism and redistribution – but with limited effects on mitigating dependency and changing funding profiles. We find that domestically oriented financial governance in ECE challenges European financial integration whilst also reinforcing ECE openness to foreign direct investment (FDI). Thus, rather than ‘e pluribus unum’ (meaning ‘out of many, one’), European financial reform has spawned growing diversity in financial policies, with ECE contributing significantly to EU fragmentation.