The finance–inequality nexus in the era of financialisation: Evidence for Portugal

Barradas, Ricardo; Lakhani, Rishi

doi:10.1002/ijfe.2848

Cited by 3 publications

(1 citation statement)

References 113 publications

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“…For potential investors, these indicators may be the basis for committing their funds to the activities of a given company (Cordeiro Santos, 2023). Therefore, non-financial companies are increasingly directing their activities towards operations on the financial market, which in the short term may bring more significant profits than the development of operational activities (Barradas, Lakhani, 2023).…”

Section: Entrepreneurship and Sustainability Issuesmentioning

confidence: 99%

Financialization of European Union countries - an attempt to determine differentiation through cluster analysis

Florczak

2024

JESI

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The process of increasing the importance of the financial sector in the economy is referred to as financialisation. This process can be observed in many sectors of the economy. The article aimed to identify the differentiation in the financialisation of European Union countries. The article verified the research hypothesis according to which the differentiation of EU countries due to financialisation, determined using cluster analysis, consent with the division into groups of countries according to geographical criteria. The k-means cluster analysis method was used to assign countries to individual groups. Six variables were adopted for the research (the ratio of the current level of budget balance to GDP, the ratio of public debt to GDP, the ratio of public expenditure to GDP, the ratio of household debt to GDP, the ratio of household consumption expenditure to GDP, the investment rate of non-financial enterprises). Based on the average values of indicators for the period 2011-2021, EU countries were assigned to characteristic groups differing in the specificity of financialisation. The results indicate that the countries of Central and Eastern Europe were classified into one cluster, while the countries of Southern Europe were classified into two separate clusters. It seems essential to classify the countries of Western Europe and Northern Europe into one cluster. The literature on the subject includes studies of financialisation and its impact on the economy. However, it is difficult to find studies that divide countries according to characteristics related to financialisation.

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Section: Entrepreneurship and Sustainability Issuesmentioning

confidence: 99%

Financialization of European Union countries - an attempt to determine differentiation through cluster analysis

Florczak

2024

JESI

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Why does the nexus between finance and income inequality break in times of financialisation? Empirical evidence for the European Union countries

Barradas

2024

JES

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PurposeThis paper aims to contribute to the current debate between the mainstream and the non-mainstream literature on the effect of the growth of finance on the level of income inequality, for which the empirical evidence has also been providing mixed results.Design/methodology/approachWe estimate a linear model and a non-linear model by employing a panel autoregressive distributed lag approach and relying on the dynamic fixed-effects estimator because of the existence of variables that are stationary in levels and stationary in the first differences.FindingsOur findings confirm that finance, economic growth, educational attainment and degree of trade openness have a positive long-term effect on the level of income inequality in the European Union countries, whilst government spending has a negative impact in the short term.Research limitations/implicationsOur findings imply that policy makers should rethink the functioning of the financial system in order to restore a supportive relationship between finance and income inequality and adopt public policies that are more in favour of the poor in order to constrain the growth of income inequality in the European Union countries.Originality/valueTo the best of our knowledge, this is the first paper that, simultaneously, focuses on the European Union countries, assesses the nexus between finance and income inequality, uses three different variables as proxies for the level of income inequality (the Gini coefficient, the top 1% income share and the top 10% income share), measures the variables that are proxies for the level of income inequality in terms of pre-tax and pre-transfer values and as post-tax and post-transfer values, takes into account four different variables as proxies for the role of finance (credit, credit-to-deposit ratio, liquid liabilities and stock market capitalisation) and identifies the long-term and short-term determinants of income inequality.

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Why are (financialised) workers becoming more resigned and conformist and less claimant? Empirical evidence from Portugal

Barradas

2024

Economic and Industrial Democracy

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The deregulation and flexibilisation of labour relations has been on the active neoliberal agenda of policymakers all over the world, including in Portugal. Against this backdrop, labour conditions have been worsening since the 1970s and 1980s, and workers have progressively lost some labour rights, which is noticeable in stagnant (or falling) wages, the rise of personal income inequalities, the proliferation of atypical work, the increase of precariousness, the surge of emotional abuse in the workplace, the deterioration of work–life balance and the spread of informal work. Nonetheless, workers have evidenced higher resignation and conformism and lower claimant behaviour in order to demand higher wages and better labour conditions, which is visible in the strong reduction in strike activity in the last four decades. In this article the author argues that workers’ financialisation and indebtedness levels restrain their demands for higher wages and better labour conditions due to the fear of decreasing their income and losing their jobs and the consequent risks of default. The article aims to assess the relationship between workers’ financialisation and indebtedness levels and their strike activity by performing a time-series econometric analysis focused on Portugal during the period 1979–2021. It is found that workers’ financialisation and indebtedness levels have a negative effect on strike activity in Portugal, both in the short term and in the long term, especially on strike volume and strike duration, and indeed have been one of the main drivers behind the decline of strike activity in Portugal in the last four decades.

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The finance–inequality nexus in the era of financialisation: Evidence for Portugal

Cited by 3 publications

References 113 publications

Financialization of European Union countries - an attempt to determine differentiation through cluster analysis

Financialization of European Union countries - an attempt to determine differentiation through cluster analysis

Why does the nexus between finance and income inequality break in times of financialisation? Empirical evidence for the European Union countries

Why are (financialised) workers becoming more resigned and conformist and less claimant? Empirical evidence from Portugal

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