Dimensions and Determinants of Financialisation:Comparing OECD Countries since 1997

The financialisation literature has grown over the past decades. Despite a generally accepted definition, financialisation has been used to describe different phenomena. We distinguish between financialisation of non-financial companies, households and the financial sector and use activity and vulnerability measures. We identify seven financialisation hypotheses in the literature and empirically investigate them in a cross-country analysis for 17 OECD countries and two time periods, 1997–2007 as well as 2008–17. We find different financialisation measures are only weakly correlated, suggesting the existence of distinct financialisation processes. There is strong evidence that financialisation is linked to asset price inflation and correlated with a debt-driven demand regime. Financial deregulation encourages financialisation. There is limited evidence that market-based financial systems are more financialised. Foreign financial inflows do not seem a main driver. We do not find indication that an investment slowdown precedes financialisation. Our findings suggest financialisation should be understood as a variegated process, playing out differently across economic sectors and countries.</p

The effects of financialisation and financial development on investment: Evidence from firm-level data in Europe

In this paper we estimate the effects of financialization on physical investment in selected western European countries using panel data based on the balance-sheets of publicly listed non-financial companies (NFCs) supplied by Worldscope for the period 1995-2015. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets by the NFCs. This finding is robust for both the pool of all Western European firms and single country estimations. The negative impacts of financial incomes are non-linear with respect to the companies’ size: financial incomes crowd-out investment in large companies, and have a positive effect on the investment of only small, relatively more credit-constrained companies. Moreover, we find that a higher degree of financial development is associated with a stronger negative effect of financial incomes on companies’ investment. This finding challenges the common wisdom on ‘finance-growth nexus’. Our findings support the ‘financialization thesis’ that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical investment, hence to stagnant or fragile growth, as well as long term stagnation in productivity

FDI and domestic investments in Germany: crowding in or out?

This paper estimates the effects of outward FDI on domestic business investment in Germany at the industry level for a panel of 19 industry and 10 services sectors in Germany. We pay particular attention to the different motivations behind FDI, and distinguishbetween FDI to high versus low wage countries, to Europe versus the rest of the world, and FDI in services and industry sectors.We find thatin industry FDI to low-wage countries crowds out domestic investment, whereas FDI to high wage countries outside Europe crowds in domestic investment. In services, FDI to Western Europe crowds in domestic investment

Pseudo-Goodwin cycles in a Minsky model

© The Author 2016. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved. Goodwin cycles result from the dynamic interaction between a profit-led demand regime and a reserve army effect in income distribution. The paper proposes the concept of a pseudo-Goodwin cycle. We define this as a counter-clockwise movement in output and wage share space which is not generated by the usual Goodwin mechanism. In particular, it does not depend on a profit-led demand regime. As a demonstration, a simple Minsky model is extended by adding a reserve army distribution mechanism such that the wage share responds positively to output. In the extended Minsky model, cycles are generated purely through the interaction between financial fragility and demand. In a first step we assume no feedback from income distribution to demand. We demonstrate that the model generates a pseudo- Goodwin cycle in output-wage share space. In a second step, we show that the result continues to hold even if a wage-led demand regime is introduced, although this can introduce instability. Our models demonstrate that the existence of a counter- clockwise movement of output and the wage share cannot be regarded as proof of the existence of a Goodwin cycle and a profit-led demand regime

Shareholder protection, income inequality and social health:a proposed research agenda

This paper develops a proposed research agenda in order to highlight how corporate governance, accounting and company law are relevant to the consideration of income inequality and wider social health. To illustrate this proposed research agenda, this paper draws on corporate governance research in the law and finance tradition, as well as macro-level studies in accounting concerned with the wider corporate governance context, in order to consider the association between shareholder protection, income inequality and child mortality. Under 5 child mortality is an objective indication of a country’s ability to nurture its children. In an influential body of work, La Porta et al. (1997a, 1997b, 1998, 2008) concluded that a common law legal system which protected the interests of shareholders gave rise to better economic and social outcomes. However, drawing on corporate governance and accounting literature we contend that such a conclusion is flawed. The findings of this paper suggest that common law countries (i.e. those with the greater legal protection for investors) have worse social outcomes in terms of under-5 child mortality.PostprintPeer reviewe

Multiple paths through the complexities of globalization: : The next three years of Competition & Change

This document is the Accepted Manuscript version of the following article: Hulya Dagdeviren, Peter Lund-Thomsen and Leo McCann, 'Multiple paths through the complexities of globalization: The next three years of Competition & Change'. The final, definitive version of this paper has been published in Competition & Change, Vol 2 (1): 3-9, advanced access publication 1 February 2017. DOI: 10.1177/1024529416680875. © The Author(s) 2016. Published by SAGE Publishing, All rights reserved.Peer reviewe

A critique of neo-mercantilist analyses of Icelandic political economy and crisis

Iceland’s journey from rags to riches in the 20th century is related, in the dominant discourse, to its gaining independence in 1944. This discourse played a significant role in both the legitimation of the finance-dominated growth model in the 1990s and 2000s and in the latter’s defence as it came under scrutiny before its collapse in October 2008. It is therefore ironic – or perhaps, in some sense, logical – to find dominant analyses of the crisis arising from the neo-mercantilist tradition. Drawing on Marxist critiques of neo-mercantilism, we challenge these interventions and thus seek to redress the neglect of social struggle in the dominant discourse

Dimensions and Determinants of Financialisation: Comparing OECD Countries since 1997

The financialisation literature has grown over the past decades. Despite a generally accepted definition, financialisation has been used to describe different phenomena. We distinguish between financialisation of non-financial companies, households and the financial sector and use activity and vulnerability measures. We identify seven financialisation hypotheses in the literature and empirically investigate them in a cross-country analysis for 17 OECD countries and two time periods, 1997–2007 as well as 2008–17. We find different financialisation measures are only weakly correlated, suggesting the existence of distinct financialisation processes. There is strong evidence that financialisation is linked to asset price inflation and correlated with a debt-driven demand regime. Financial deregulation encourages financialisation. There is limited evidence that market-based financial systems are more financialised. Foreign financial inflows do not seem a main driver. We do not find indication that an investment slowdown precedes financialisation. Our findings suggest financialisation should be understood as a variegated process, playing out differently across economic sectors and countries

Unveiling ancient Jerusalem’s pastoral dynamics (7th to 2nd centuries BCE) with multi-isotope analysis

AbstractThis study explores changes in pastoral practices in the Jerusalem region (Iron Age II - Late Hellenistic) through a multi-isotope approach (strontium, carbon, oxygen, and nitrogen). Based on the analysis of 135 sheep, goat, and cattle teeth and bone samples from Givati Parking Lot we demonstrate the value of this method in reconstructing past animal husbandry, revealing adaptation and resilience of pastoral communities amidst environmental and socio-political changes. Isotopic analysis indicates local sourcing for most animals, with intriguing outliers from distant regions up to 150 km away, suggesting regional exchange networks. Notably, the Persian period (5th century BCE) exhibits a wider isotope range, implying increased flexibility and exploitation of diverse grazing lands, potentially driven by climate shifts and political upheavals. Conversely, Late Hellenistic (2nd century BCE) livestock display restricted movement, while showcasing a rise in desert caprines, indicative of increased import compared to the Persian era. These findings highlight the dynamism and adaptability of past pastoral communities, adjusting their strategies in response to various pressures. This study opens new avenues for understanding human-environment interactions in the Levant and underscores the power of multi-isotope approaches in unraveling intricate socio-economic and ecological dynamics of the past. © The Author(s) 2024