The Open UniversitySkip to content
 

Financialisation and physical investment: a global race to the bottom in accumulation?

Tori, Daniele and Onaran, Özlem (2017). Financialisation and physical investment: a global race to the bottom in accumulation? PKSG working paper series.

Full text available as:
[img]
Preview
PDF (Version of Record) - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (1MB) | Preview
URL: http://www.postkeynesian.net/downloads/working-pap...
Google Scholar: Look up in Google Scholar

Abstract

We estimate the effects of financialisation on physical investment in the developed and developing countries using panel data based on balance-sheets of publicly listed non-financial companies (NFCs) for the period 1995-2015. Among the developed economies, we focus on the cases of the USA, Japan, and a group of Western European countries. In the developing world, we present estimations based on the group of the NFCs in all developing countries as well as BRICS as a group- and country specific estimations for South Africa, South Korea, India, and China. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets. The negative impacts of financial incomes are non-linear with respect to the companies’ size; financial income crowds out investment in large companies, and have a positive effect on the investment of only smaller, relatively more credit-constrained companies. Our findings support the ‘financialisation 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 concerns for productivity in both developed and developing countries.

Item Type: Other
Copyright Holders: 2017 The Authors
Project Funding Details:
Funded Project NameProject IDFunding Body
Financialization and Investment in Developed and Developing countriesNot SetUNCTAD
Keywords: financialisation; investment; non-financial sector; firm data; developing countries
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 50240
Depositing User: Daniele Tori
Date Deposited: 20 Jul 2017 10:47
Last Modified: 07 Dec 2018 13:06
URI: http://oro.open.ac.uk/id/eprint/50240
Share this page:

Download history for this item

These details should be considered as only a guide to the number of downloads performed manually. Algorithmic methods have been applied in an attempt to remove automated downloads from the displayed statistics but no guarantee can be made as to the accuracy of the figures.

Actions (login may be required)

Policies | Disclaimer

© The Open University   contact the OU