There is growing consensus that external dynamics of the global financial and monetary system substantially shape financialisation in Emerging Economies (EEs). We identify four aspects of international financialisation that are commonly understood to drive domestic financialisation: financial openness, foreign financial inflows, leadership in global production networks (GPNs) and the presence of Global Financial Centres (GFCs). We set out to analyse how these dimensions of international financialisation impact the phenomenon at the domestic macroeconomic level, including the state, the financial sector, non-financial companies (NFCs) and households. Using a sample of 27 EEs for 2010-2023, we find that international financialisation has a significant influence at the domestic level. First, the presence of a GFC is linked to financialisation across the entire private sector (the financial sector, NFCs and households). Second, the accumulation of foreign financial liabilities appears to impact the financialisation of NFCs and households. Third, GPN integration of domestic NFCs is associated with financial sector financialisation. Finally, financial liberalisation strongly correlates with state financialisation while leaving the private sector untouched. Our results demonstrate the importance of specific external drivers of financialisation - especially GFCs and foreign liabilities - but crucially also their limits, highlighting the agency of domestic actors.

This contribution uses a discussion of the global climate finance architecture to put forward and illustrate a conceptualization of the financialization of and by international organizations. It highlights four channels through which the phenomenon operates: (1) the adoption of financial logics; (2) the advancement of financial innovation; (3) the embracing of financial accumulation; and (4) the direct financialization of member states' policies and citizens' lives. As consequence, four main types of financialization can be identified that are promoted within and by international organizations: within intergovernmental fora, these are the financialization of policy narratives, meaning the redefinition of policy challenges as questions of financial investment, and of standards; while international organizations, in their function as governing and administrative bodies, can drive financialization by turning public goods into the basis for financial assets, and through the direct representation of financial interests.

Financialisation is not a homogenous but a variegated process. However, the question along which categories this variegation happens is currently unanswered. We identify four variegation categories: financial sector structure, productive structures, the role of the state, and the growth model. We apply these categories to two seemingly similar emerging-economy contexts which have produced different financialisation experiences: Colombia and South Africa. Financialisation in South Africa is much more market-based, meaning it is led by the financial sector unfolding through financial markets and banks’ activities visible in their much larger size, activity, and international interconnectedness, than in Colombia. Hence, South African credit extension, bond markets, domestic pension funds, and stock market capitalisation are substantially larger than Colombia’s, while the Rand has experienced strong internationalisation since 2000. Nevertheless, there is evidence financialisation processes have been unfolding dynamically in both countries over the past two decades, reinforcing the view of variegated financialisation as a common tendency with significant heterogeneities across countries.

The world region is missing from financialisation analysis of emerging economies (EEs) with little attention given to regional commonalities or comparative analysis across regions. This article sets out to identify regional commonalities in financialisation experiences across EEs, rooted in domestic institutions and countries’ varying integration into the global financial system. Bringing commonalities within and differences between emerging regions to the fore will help us understand the specificities of their political economies and current capitalist experiences. Based on existing research and data availability, six financialisation indicators across five macroeconomic aggregates are identified. Considering 2008–17, a ranking emerges with the most affected region being Central Easter Europe (CEE), followed by Latin America. Emerging Asia takes an intermediate position while EEs in the Middle East and North Africa (MENA) region and Africa show limited signs of financialisation. Our analysis identifies distinct regional features. Financialisation in CEE and Latin America is strongly driven by external forces, the key difference being the role that large domestic capitalists play in the process. Across Emerging Asia, financialisation has mainly unfolded in the private sector while state authorities could to some extent insulate public policy. In MENA, much of the private sector appears outside of the reach of financialisation because of the economic and political power of regional conglomerates. In emerging Africa, the phenomenon is concentrated in very few, if intensely affected, financialisation centres. From a theoretical perspective, we find financialisation is driven by a mix of external factors and domestically influential capitalist elites pursuing their interests.

Globally, corporate cash holdings have risen since the 1980s. In South Africa, some commentators have accused corporations of engaging in an ‘investment strike’, while others see corporate liquidity as a precaution against systemic uncertainty. We use the unique South African Revenue Service/National Treasury firm-level dataset to scrutinize corporate liquidity, using panel analysis. Relative to GDP, corporate cash and liquidity holdings have not increased between 2010 and 2017. However, corporate cash is high in international comparison and has grown at the firm level. We do not find evidence for the hypothesis that companies are engaging in an investment strike. Cash and liquidity are shaped by idiosyncratic and sectoral risk factors. In the short run, heightened uncertainty might reduce corporate cash and liquidity as firms struggle to adjust to an unexpected economic situation. In the medium run, we find a strong association between political uncertainty and corporate cash and liquidity holdings.

Post crisis, local governments’ (LGs) budgets have been drastically cut in Britain. Similar budgetary strains had serious consequences in the past, leading to major restructuring in LGs’ functions. This paper interrogates the spatial dynamics of short-term municipal finances by putting into dialogue the political economy perspectives on financialisation with the economic geography literature on urban governance. Using data for over 400 municipal authorities in Britain, we examine locational underpinnings of changing financial practices with respect to spending cuts. We find that austerity increased risk and uncertainty for LGs. To preserve key services in such an environment, they resorted to short-term borrowing in breach of regulatory guidance. Effectively, an internal market for inter-council lending and borrowing has been created based on market principles in which LGs with surplus cash and reserves have extended credit to those with liquidity problems. On the asset side, the austerity programme forced them to embrace financial logics through a spectacular shift from cash and deposit holdings to investment in money market funds and credit extension as they have strived to generate as much income as possible to fund services at risk.

SUMMARY The global Covid-19 pandemic has accelerated a trend under way for the last decade: the enlistment of private-sector commercial finance for development. This finance can be brought in through (1) regular cross-border flows, (2) blended finance and (3) impact bonds. This briefing argues that intensified foreign financial inflows are likely to draw African economies further into financialisation, which increases financial instability and can undermine the democratic process, jeopardising just socio-economic development. Specifically, the short-termism of portfolio flows requires costly reserve accumulation, foreign direct investment exposes firms to demands for shareholder value generation, and external debt introduces exchange rate risk for domestic borrowers.

Financialization has become a popular concept across the social sciences, usually defined as the increasing role of financial motives, financial markets, financial actors, and financial institutions in the operation of the domestic and international economies. Financialization researchers highlight the detrimental consequences of an excessively large and powerful financial sector on economy and society. In South Africa, financialization has been shaped by its colonial and apartheid past, especially the strong links of South African corporations and banks to the international financial centre of London. Low growth and investment, an outcome of the finance-led accumulation regime, have also resulted in the continuity of extreme inequality and high levels of unemployment. In the Global South, financialization mainly affects emerging economies since they possess relatively developed financial markets in comparison to poorer countries. South Africa is the only African economy for which there is a substantial financialization literature. In comparison to other emerging economies, South Africa is relatively strongly financialized as stock market capitalization is extremely high, making Johannesburg one of the top financial centres in the Global South. Furthermore, financial inflows into the country are comparatively large, JSE-listed companies are well integrated into global value chains and household debt is high.

Financialization in the Global South plays out differently than in the Global North. Work comparing financialization variations across poorer countries and regions is limited. Therefore, this article takes stock of the structural and spatial variegation of financialization in emerging economies (EMEs), by reviewing the phenomenon on the international, state and city level for 20 EMEs. National-level data on the financial sector, non-financial firms, households and the state are presented alongside indicators capturing spatial, i.e. local and transnational, dimensions. These are indices measuring status and international connectedness of financial centres as well as international financial flows and the global presence of listed companies.

The Japanese economy has remained in poor health since the crisis the country experienced in the aftermath of the stock exchange and real estate market collapse in the late 1980s. Lately, there has been some enthusiasm that Japan has finally embarked on a sustainable economic recovery. This perception was mainly fuelled by the IMF's (2015) approval of the reform package introduced by Prime Minister Abe following his election in 2012 and more recent assessments of its partial success. This chapter assesses the impact of Abenomics on Japanese non-financial corporations (NFCs), the motor of the country's strong growth performance in the decades after World War II leading up to the early 1990s crisis. In doing so, we engage with the claim put forward in the financial press as well as academic debates that Japan's economy has become financialised (Robinson, 2017). We conduct an analysis of Japanese NFCs using the Corporate Financial Statements database and National Accounts data, compiled by the Cabinet Office. Given our results, we argue that Abenomics has neither led to a sustainable recovery in firms' spending nor to their financialisation.

Development and ChangeVolume 50, Issue 5 p. 1466-1481 Review Essay How Financialization Undermines Democracy Ewa Karwowski, Ewa Karwowski orcid.org/0000-0001-6350-1839 Search for more papers by this author Ewa Karwowski, Ewa Karwowski orcid.org/0000-0001-6350-1839 Search for more papers by this author First published: 01 August 2019 https://doi.org/10.1111/dech.12537Citations: 4 I would like to thank Dr Florian Schaefer and the anonymous reviewers for comments on the draft version of this review essay. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume50, Issue5September 2019Pages 1466-1481 RelatedInformation

Understanding the nature of state financialisation is crucial to ensure de-financialisation efforts are successful. Therefore, this article provides a structured overview of the emerging literature on financialisation and the state. We define financialisation of the state broadly as the changed relationship between the state, understood as sovereign with duties and accountable towards its citizens, and financial markets and practices, in ways that can diminish those duties and reduce accountability. We then argue that there are four ways in which financialisation works in and through public institutions and policies: adoption of financial logics, advancing financial innovation, embracing financial accumulation strategies and directly financialising the lives of their citizens. Organising our review around the two main policy fields of fiscal and monetary policy, four definitions of financialisation in the context of public policy and institutions emerge. When dealing with public expenditure on social provisions, financialisation most often refers to the transformation of public services into the basis for actively traded financial assets. In the context of public revenue, financialisation describes the process of creating and deepening secondary markets for public debt, with the state turning into a financial market player. Finally, in the realm of monetary policy, financial deregulation is perceived to have paved the way for financialisation, while inflation targeting and the encouragement, or outright pursuit, of market-based short-term liquidity management among financial institutions constitute financialised policies.

ABSTRACT 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.

This article reveals the processes of financialization in the South African economy by tracing the sources and destinations of non-financial corporations’ liquidity. The paper argues that rather than the volume of non-financial corporations’ financial investment, the composition of financial assets is crucial to assess corporate financialization in the country. Non-financial businesses in South Africa fundamentally transformed their investment behaviour during the 1990s, shifting from more productive uses such as trade credit towards highly liquid and potentially innovative (and therefore risky) financial investment. Following the direction of financial flows the article shows that companies’ financial operations – fuelled by foreign capital inflows – are linked to the price inflation in South African property markets.

Understanding the nature of state financialisation is crucial to ensure de-financialisation efforts are successful. This paper provides a structured overview of the emerging literature on financialisation and the state. We define financialisation of the state broadly as the changed relationship between the state, understood as sovereign with duties and accountable towards its citizens, and financial markets and practices, in ways that can diminish those duties and reduce accountability. We then argue that there are four ways in which financialisation works in and through public institutions and policies: adoption of financial motives, advancing financial innovation, embracing financial accumulation strategies, and directly financialising the lives of citizens. Organising our review around the two main policy fields of fiscal and monetary policy, four definitions of financialisation in the context of public policy and institutions emerge. When dealing with public expenditure on social provisions financialisation most often refers to the transformation of public services into the basis for actively traded financial assets. In the context of public revenue, financialisation describes the process of creating and deepening secondary markets for public debt, with the state turning into a financial market player. Finally, in the realm of monetary policy financial deregulation is perceived to have paved the way for financialisation, while inflation targeting and the encouragement, or outright pursuit, of market-based short-term liquidity management among financial institutions constitute financialised policies.

© The Author(s) 2018 This is the version of the article accepted for publication in Competition & Change published by SAGE: Karwowski, Ewa and Fine, Ben and Ashman, Samantha (2018) 'Introduction to the special section ‘Financialization in South Africa’.' Competition & Change, 22 (4). pp. 383-387. https://doi.org/10.1177/1024529418791762

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 2008-2017. 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 variegated process, playing out differently across economic sectors and countries.

Financialisation research has originally focussed on the US experience, but the concept is now increasingly applied to emerging economies (EMEs). There is a rich literature stressing peculiarities of individual country experiences, but little systematic comparison across EMEs. This paper fills this gap, providing an overview of the debate and identifying six financialisation interpretations for EMEs. These different interpretations stress (1) financial deregulation, (2) foreign financial inflows, (3) asset price volatility, (4) the shift from bank-based to market-based finance, (5) business debt, and (6) household indebtedness. We construct and compare measures of the six financialisation interpretations across a sample of 17 EMEs from Latin America, emerging Europe, Africa and Asia, contrasting them with the US and UK, two financialised economies. We find considerable variation in financialisation experiences of EMEs. Asset price volatility is found across the continents. Asia has been more exposed to capital inflows, stock markets have gained importance and private sector debt has risen. In emerging Europe financial deregulation has been more pronounced with lower levels but strong increases in household debt. The picture is similar in South Africa, the African EME in the sample, where household debt is comparatively high. Financialisation in Latin America is weaker according to our measures.