This survey reviews how recent political economy literature helps to explain variation in governance, competition, funding composition, and access to credit. Evolution in political institutions can account for financial evolution, and, unlike time-invariant legal institutions or cultural traits, is critical to understanding rapid changes in financial structure, such as the Great Reversal in the early 20th century. Future research should model the sources and consequences of financial instability, and predict how major redistributive shocks will shape regulatory choices and financial governance.