The Impacts of financialization on the finance-investment-saving-funding circuit
Keywords:
Financialization, Finance-Investment-Saving-Funding Circuit, Financial fragility
Abstract
The objective of this work is to evaluate the effects of the financialization of contemporary capitalism on the post-Keynesian finance-investment-saving-funding (FISF) circuit from a systematization of the main evidences brought by the literature on financialization. For this, a presentation of the FISF circuit is carried out and then the impacts of financialization on each of its components are investigated. It is concluded that despite some positive effects, all circuit elements are negatively impacted. However, it is in the funding component that the greatest effects of financialization on the circuit are concentrated. These impacts have consequences on the financial stability of the economy, economic growth and the role of the State.
Downloads
Download data is not yet available.
References
AGLIETTA, M e REBÉRIOUX, A. (2005). Corporate governance adrift: a critique of shareholder value. Edward Elgar Publishing.
ALMEIDA, H.; FOS, V.; KRONLUND, M. (2016) “The real effects of share repurchases”. Journal of Financial Economics, v. 119(1), p. 168–185. https://doi.org/10.1016/j.jfineco.2015.08.008
ARESTIS, P.; RESENDE, M. F. C. (2015). Fiscal policy and the substitution between national and foreign savings. Journal of Post Keynesian Economics, v. 37 (3), p. 436–458. https://doi.org/10.1080/01603477.2015.1000168
ARESTIS, P.; RESENDE, M.F.C.; ALENCAR; D.A.; BARBOSA, L.O.S.; DINIZ, G.F.C. (2017). The Finance-Investment and Saving-Funding Circuit in the Closed and Open Economies with Government. International Review of Applied Economics, v. 31(6), p. 832-845. https://doi.org/10.1080/02692171.2017.1324411
BONIZZI, B. (2013) “Financialization in developing and emerging countries: a survey”. International Journal of Political Economy, 42(4), p. 83-107. https://doi.org/10.2753/IJP0891-1916420405
BRAGA, J C. S. (2000) Temporalidade da riqueza: teoria da dinâmica e financeirização do capitalismo. Campinas: Unicamp.
BRAGA, J. C. S.; OLIVEIRA, G. C.; WOLF, P. J. W.; PALLUDETO, A. W. A.; DEOS, S. S. de. (2017) “For a political economy of financialization: theory and evidence”. Economia e Sociedade, 26(spe), p. 829–856. https://doi.org/10.1590/1982-3533.2017v26n4art1
CARVALHO, F. J. C. de. (1997) “Financial innovation and the Post Keynesian approach to the ‘process of capital formation’”. Journal of Post Keynesian Economics, 19(3), p. 461-487. https://doi.org/10.1080/01603477.1997.11490122
CARVALHO, F. J. C. de. (2012) “Aggregate savings, finance and investment”. European Journal of Economics and Economic Policies: Intervention, 9(2), p. 197-213. https://doi.org/10.4337/ejeep.2012.02.05
CARVALHO, F. J. C. de. (2014) “Expectativas, Incerteza e convenções”. In: Monteiro Filha, D.; Prado, L.C.D.; Lastres, H.M.M. (eds.) Estratégias de Desenvolvimento, Política Industrial e Inovação: ensaios em memória de Fabio Erber. Rio De Janeiro: BNDES, p. 207-234.
CARVALHO, F. J. C. de. (2016) “On the nature and role of financial systems in Keynes’s entrepreneurial economies”. Journal of Post Keynesian Economics, 39(3), p. 287-307. https://doi.org/10.1080/01603477.2016.1190282
CARNEIRO, R. (2009) “O financiamento da acumulação de ativos” (um esquema analítico). IE-UNICAMP Texto para discussão, n. 167.
CAVALCANTE, A. T. M.; CROCCO, M. A.; SANTOS, F. B.; NOGUEIRA, M. (2018). “Financialization and Space: Theoretical and Empirical Contributions”. Revista Brasileira de Estudos Urbanos e Regionais, 20(2), p. 193. https://doi.org/10.22296/2317-1529.2018v20n2p193
CETORELLI, N.; PERISTIANI, S. (2012) “The role of banks in asset securitization”. Federal Reserve Bank of New York Economic Policy Review, 18(2), p. 47-64.
CROTTY, J. (2003) “The neoliberal paradox: The impact of destructive product market competition and impatient finance on nonfinancial corporations in the neoliberal era”. Review of Radical Political Economics, 35(3), p. 271–279. https://doi.org/10.1177/0486613403255533
DARDOT, P.; LAVAL, C. (2017) A nova razão do mundo. Boitempo editorial.
DAVIDSON, P. (1994) Post Keynesian macroeconomic theory: a foundation for successful economic policies for the twenty-first century. Cambridge University Press.
DAVIS, L. (2017) “Financialization and investment: A survey of the empirical literature”. Journal of Economic Surveys, 31(5), p. 1332-1358. https://doi.org/10.1111/joes.12242
DE SOUZA, J. P. A.; EPSTEIN, G. (2014) “Sectoral net lending in six financial centers”. Political Economy Research Institute, Working Paper Series, 346.
DEMIR, F. (2009) “Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets”. Journal of Development Economics, 88(2), p. 314-324. https://doi.org/10.1016/j.jdeveco.2008.04.002
EPSTEIN, G. (2005) “Introduction”. In: EPSTEIN, G. (ed.). Financialization and the World Economy. Cheltenham: Edward Elgar.
GALSTON, W. A.; KAMARCK, E. C. (2015) “More builders and fewer traders: a growth strategy for the American economy”. Center for Effective Public Management.
GERMER, C. M. (1994) “O sistema de crédito e o capital fictício em Marx”. Ensaios FEE, 15(1), p. 179-201.
GUTTMANN, R. (2008) “Uma introdução ao capitalismo dirigido pelas finanças”. Revista Novos Estudos Cebrap, 82, p.11-33. https://doi.org/10.1590/S0101-33002008000300001
HERSCOVICI, A. (2020) “Preferência pela liquidez, financeirização e efeitos de propagação: da não neutralidade da moeda à não neutralidade da finança”. Revista de Economia Contemporânea, 24(2), p. 1-23. https://doi.org/10.1590/1980552724212
KARWOWSKI, E.; STOCKHAMMER, E. (2017) “Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies”. Economic and Political Studies, v. 5, n. 1, p. 60-86. https://doi.org/10.1080/20954816.2016.1274520
KEYNES, J. Ma. (1936 [2018]). The general theory of employment, interest, and money. Springer. https://doi.org/10.1007/978-3-319-70344-2
KEYNES, J. M. (1937 [2010]). “A teoria ex ante da taxa de juros”. In: Clássicos da Literatura Econômica. Rio de Janeiro: IPEA, 3ed., p. 85-96.
KRIPPNER, G. R. (2011) Capitalizing on Crisis: The Political Origins of the Rise of Finance. Harvard University Press.
LAZONICK, W.; O’SULLIVAN, M. (2000) “Maximizing shareholder value: a new ideology for corporate governance”. Economy and society, 29(1), p. 13–35. https://doi.org/10.1080/030851400360541
MASON, J. W. (2015) “Disgorge the cash: The disconnect between corporate borrowing and investment”. Roosevelt Institute, 25, p. 1-38.
MILBERG, W. (2008) “Shifting sources and uses of profits: Sustaining US financialization with global value chains”. Economy and Society, 37(3), p. 420–451. https://doi.org/10.1080/03085140802172706
MINSKY, H. P. (1986 [2010]) Estabilizando uma economia instável. Osasco: Novo Século.
ORHANGAZI, Ö. (2008) “Financialisation and capital accumulation in the non-financial corporate sector: A theoretical and empirical investigation on the US economy: 1973–2003”. Cambridge journal of economics, 32(6), p. 863-886. https://doi.org/10.1093/cje/ben009
PALLEY, T. I. (2007) “Financialization: What it is and what it matters”. The Levy Economic Institute of Bard College, Working Paper, 525. http://dx.doi.org/10.2139/ssrn.1077923
PAULA, L. F. de. (2013) “Financiamento, crescimento econômico e funcionalidade do sistema financeiro: uma abordagem pós-keynesiana”. Estudos Econômicos, 43(2), p. 363-396. https://doi.org/10.1590/S0101-41612013000200006
PLIHON, D. (1995). “A ascensão das finanças especulativas”. Economia e Sociedade, 4(2), p. 61-48.
PIKE, A.; POLLARD, J. (2010). “Economic geographies of financialization”. Economic Geography, 86(1), p. 29–51.
POWELL, J. (2019). “Towards a marxist theory of financialized capitalism”. In: VIDAL, M.; SMITH, T.; ROTTA, T. (eds). The oxford handbook of Karl Marx. Oxford: Oxford University Press, p. 629–650.
RESENDE, M. F. C. (2008). O circuito finance-investimento-poupança-funding em economias abertas. Revista de Economia Política, v. 28(1), p. 136-154. https://doi.org/10.1590/S0101-31572008000100007
SECCARECCIA, M. (2012) “Financialization and the transformation of commercial banking: understanding the recent Canadian experience before and during the international financial crisis”. Journal of Post Keynesian Economics, 35(2), p. 277-300.
STOCKHAMMER, E. (2004) “Financialisation and the slowdown of accumulation”. Cambridge journal of economics, 28(5), p. 719-741. https://doi.org/10.1093/cje/beh032
STOCKHAMMER, E. (2008) “Some stylized facts on the finance-dominated accumulation regime”. Competition & Change, 12(2), p. 184-202. https://doi.org/10.1179/102452908X289820
STUDART, R. (1995) Investment finance in economic development. Routledge.
STUDART, R.; ALVES JR, A. J. (2020). “Fernando Cardim De Carvalho, sistemas financeiros e o financiamento da acumulação”. Revista de Economia Contemporânea, 24(2), p. 1-18. https://doi.org/10.1590/198055272424
ALMEIDA, H.; FOS, V.; KRONLUND, M. (2016) “The real effects of share repurchases”. Journal of Financial Economics, v. 119(1), p. 168–185. https://doi.org/10.1016/j.jfineco.2015.08.008
ARESTIS, P.; RESENDE, M. F. C. (2015). Fiscal policy and the substitution between national and foreign savings. Journal of Post Keynesian Economics, v. 37 (3), p. 436–458. https://doi.org/10.1080/01603477.2015.1000168
ARESTIS, P.; RESENDE, M.F.C.; ALENCAR; D.A.; BARBOSA, L.O.S.; DINIZ, G.F.C. (2017). The Finance-Investment and Saving-Funding Circuit in the Closed and Open Economies with Government. International Review of Applied Economics, v. 31(6), p. 832-845. https://doi.org/10.1080/02692171.2017.1324411
BONIZZI, B. (2013) “Financialization in developing and emerging countries: a survey”. International Journal of Political Economy, 42(4), p. 83-107. https://doi.org/10.2753/IJP0891-1916420405
BRAGA, J C. S. (2000) Temporalidade da riqueza: teoria da dinâmica e financeirização do capitalismo. Campinas: Unicamp.
BRAGA, J. C. S.; OLIVEIRA, G. C.; WOLF, P. J. W.; PALLUDETO, A. W. A.; DEOS, S. S. de. (2017) “For a political economy of financialization: theory and evidence”. Economia e Sociedade, 26(spe), p. 829–856. https://doi.org/10.1590/1982-3533.2017v26n4art1
CARVALHO, F. J. C. de. (1997) “Financial innovation and the Post Keynesian approach to the ‘process of capital formation’”. Journal of Post Keynesian Economics, 19(3), p. 461-487. https://doi.org/10.1080/01603477.1997.11490122
CARVALHO, F. J. C. de. (2012) “Aggregate savings, finance and investment”. European Journal of Economics and Economic Policies: Intervention, 9(2), p. 197-213. https://doi.org/10.4337/ejeep.2012.02.05
CARVALHO, F. J. C. de. (2014) “Expectativas, Incerteza e convenções”. In: Monteiro Filha, D.; Prado, L.C.D.; Lastres, H.M.M. (eds.) Estratégias de Desenvolvimento, Política Industrial e Inovação: ensaios em memória de Fabio Erber. Rio De Janeiro: BNDES, p. 207-234.
CARVALHO, F. J. C. de. (2016) “On the nature and role of financial systems in Keynes’s entrepreneurial economies”. Journal of Post Keynesian Economics, 39(3), p. 287-307. https://doi.org/10.1080/01603477.2016.1190282
CARNEIRO, R. (2009) “O financiamento da acumulação de ativos” (um esquema analítico). IE-UNICAMP Texto para discussão, n. 167.
CAVALCANTE, A. T. M.; CROCCO, M. A.; SANTOS, F. B.; NOGUEIRA, M. (2018). “Financialization and Space: Theoretical and Empirical Contributions”. Revista Brasileira de Estudos Urbanos e Regionais, 20(2), p. 193. https://doi.org/10.22296/2317-1529.2018v20n2p193
CETORELLI, N.; PERISTIANI, S. (2012) “The role of banks in asset securitization”. Federal Reserve Bank of New York Economic Policy Review, 18(2), p. 47-64.
CROTTY, J. (2003) “The neoliberal paradox: The impact of destructive product market competition and impatient finance on nonfinancial corporations in the neoliberal era”. Review of Radical Political Economics, 35(3), p. 271–279. https://doi.org/10.1177/0486613403255533
DARDOT, P.; LAVAL, C. (2017) A nova razão do mundo. Boitempo editorial.
DAVIDSON, P. (1994) Post Keynesian macroeconomic theory: a foundation for successful economic policies for the twenty-first century. Cambridge University Press.
DAVIS, L. (2017) “Financialization and investment: A survey of the empirical literature”. Journal of Economic Surveys, 31(5), p. 1332-1358. https://doi.org/10.1111/joes.12242
DE SOUZA, J. P. A.; EPSTEIN, G. (2014) “Sectoral net lending in six financial centers”. Political Economy Research Institute, Working Paper Series, 346.
DEMIR, F. (2009) “Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets”. Journal of Development Economics, 88(2), p. 314-324. https://doi.org/10.1016/j.jdeveco.2008.04.002
EPSTEIN, G. (2005) “Introduction”. In: EPSTEIN, G. (ed.). Financialization and the World Economy. Cheltenham: Edward Elgar.
GALSTON, W. A.; KAMARCK, E. C. (2015) “More builders and fewer traders: a growth strategy for the American economy”. Center for Effective Public Management.
GERMER, C. M. (1994) “O sistema de crédito e o capital fictício em Marx”. Ensaios FEE, 15(1), p. 179-201.
GUTTMANN, R. (2008) “Uma introdução ao capitalismo dirigido pelas finanças”. Revista Novos Estudos Cebrap, 82, p.11-33. https://doi.org/10.1590/S0101-33002008000300001
HERSCOVICI, A. (2020) “Preferência pela liquidez, financeirização e efeitos de propagação: da não neutralidade da moeda à não neutralidade da finança”. Revista de Economia Contemporânea, 24(2), p. 1-23. https://doi.org/10.1590/1980552724212
KARWOWSKI, E.; STOCKHAMMER, E. (2017) “Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies”. Economic and Political Studies, v. 5, n. 1, p. 60-86. https://doi.org/10.1080/20954816.2016.1274520
KEYNES, J. Ma. (1936 [2018]). The general theory of employment, interest, and money. Springer. https://doi.org/10.1007/978-3-319-70344-2
KEYNES, J. M. (1937 [2010]). “A teoria ex ante da taxa de juros”. In: Clássicos da Literatura Econômica. Rio de Janeiro: IPEA, 3ed., p. 85-96.
KRIPPNER, G. R. (2011) Capitalizing on Crisis: The Political Origins of the Rise of Finance. Harvard University Press.
LAZONICK, W.; O’SULLIVAN, M. (2000) “Maximizing shareholder value: a new ideology for corporate governance”. Economy and society, 29(1), p. 13–35. https://doi.org/10.1080/030851400360541
MASON, J. W. (2015) “Disgorge the cash: The disconnect between corporate borrowing and investment”. Roosevelt Institute, 25, p. 1-38.
MILBERG, W. (2008) “Shifting sources and uses of profits: Sustaining US financialization with global value chains”. Economy and Society, 37(3), p. 420–451. https://doi.org/10.1080/03085140802172706
MINSKY, H. P. (1986 [2010]) Estabilizando uma economia instável. Osasco: Novo Século.
ORHANGAZI, Ö. (2008) “Financialisation and capital accumulation in the non-financial corporate sector: A theoretical and empirical investigation on the US economy: 1973–2003”. Cambridge journal of economics, 32(6), p. 863-886. https://doi.org/10.1093/cje/ben009
PALLEY, T. I. (2007) “Financialization: What it is and what it matters”. The Levy Economic Institute of Bard College, Working Paper, 525. http://dx.doi.org/10.2139/ssrn.1077923
PAULA, L. F. de. (2013) “Financiamento, crescimento econômico e funcionalidade do sistema financeiro: uma abordagem pós-keynesiana”. Estudos Econômicos, 43(2), p. 363-396. https://doi.org/10.1590/S0101-41612013000200006
PLIHON, D. (1995). “A ascensão das finanças especulativas”. Economia e Sociedade, 4(2), p. 61-48.
PIKE, A.; POLLARD, J. (2010). “Economic geographies of financialization”. Economic Geography, 86(1), p. 29–51.
POWELL, J. (2019). “Towards a marxist theory of financialized capitalism”. In: VIDAL, M.; SMITH, T.; ROTTA, T. (eds). The oxford handbook of Karl Marx. Oxford: Oxford University Press, p. 629–650.
RESENDE, M. F. C. (2008). O circuito finance-investimento-poupança-funding em economias abertas. Revista de Economia Política, v. 28(1), p. 136-154. https://doi.org/10.1590/S0101-31572008000100007
SECCARECCIA, M. (2012) “Financialization and the transformation of commercial banking: understanding the recent Canadian experience before and during the international financial crisis”. Journal of Post Keynesian Economics, 35(2), p. 277-300.
STOCKHAMMER, E. (2004) “Financialisation and the slowdown of accumulation”. Cambridge journal of economics, 28(5), p. 719-741. https://doi.org/10.1093/cje/beh032
STOCKHAMMER, E. (2008) “Some stylized facts on the finance-dominated accumulation regime”. Competition & Change, 12(2), p. 184-202. https://doi.org/10.1179/102452908X289820
STUDART, R. (1995) Investment finance in economic development. Routledge.
STUDART, R.; ALVES JR, A. J. (2020). “Fernando Cardim De Carvalho, sistemas financeiros e o financiamento da acumulação”. Revista de Economia Contemporânea, 24(2), p. 1-18. https://doi.org/10.1590/198055272424
Published
2022-05-30
How to Cite
Santos, D., & da Cunha Resende, M. F. (2022). The Impacts of financialization on the finance-investment-saving-funding circuit. Brazilian Keynesian Review, 7(2), 306-333. https://doi.org/10.33834/bkr.v7i2.262
Section
Articles
Copyright (c) 2021 Diogo Santos, Marco Flávio da Cunha Resende
This work is licensed under a Creative Commons Attribution 4.0 International License.
- Authors keep copyrights and concede to the Journal the right to the first publication, with the paper simultaneously licenced under the Creative Commons Attribution 4.0 International License which allows recognised author and journal work sharing.
- Authors are authorized to assume additional contracts separately, for non-exclusive versions of the paper published in this journal (e.g.: publish in an instituional repository or as a book chapter) with the recogntion of authorship and initial publication in this journal.
- Authors are allowed (and are estimulated) to publish and distribute their work online (e.g.: in institutional repositories or at their personal websites) at any point before or during the editorial process, once this may generate productive alterations on the paper, as well as increse the factor of impact and quotation of the published paper (please, see Free Access Effect)
