The impact of financial globalization and financialization on the economy in the current crisis through banking corporate governance

Abstract

This work analyzes the role of governance of financial entities in the current crisis. Neoliberal economic policies, deregulation and liberalization have characterized financial globalization, giving rise to the financialization of the economy. This paper, using the analysis-synthesis method, shows that the corporate governance of entities has adapted to the new social environment under the influence of the interests of the investors. The results of this paper suggest the need to monitor the over-emphasis on the maximization of short-term shareholder value without relativizing the risk taken to achieve it, as such, the emphasis on short-term shareholder value is considered a crucial contributing factor to the present crisis

The liquidity-profitability trade-off in Bulgaria in terms of the changed financial management functions during crisis

“…Salhman (2009) qualified the crisis in the following way: "The macroeconomic problems were the result of bad microeconomic decisions". Pereira (2010) and Azkunaga et al (2013) analysed the process of "financialization" and creating massive artificial financial wealth through deregulation of existing financial operations and reducing control in order to maximize and expand the potential risks for investors. The transformation of financial management into a leading concept for economic and corporate governance is a trend that undoubtedly affected the potential for economic growth and development of companies.…”

A Common Framework on Inequalities for G7 Countries

“…In financial markets, deregulation, by leading to a general financialization of the economy (Azkunaga et al. , ), has been associated to higher income inequality. According to empirical evidence, the increased size of financial intermediaries has contributed to sizeable wage premia of financial sector employees, mostly concentrated at the upper end of the earnings distribution (Denk, ).…”