Why 'financialisation' hasn't depressed US productive investment

Kliman, Andrew; Williams, Shannon D.

doi:10.1093/cje/beu033

Cited by 111 publications

(69 citation statements)

References 5 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“… c The text of Kliman and Williams () also reiterates a range of other possible indicators of financialization. The main text, however, most often refers to financialization in the context of ‘rising dividend payments and the growth of corporations’ portfolio investment’ (p. 67).…”

Section: Defining Financializationmentioning

confidence: 99%

“…Notably, in the USA context, the post‐1980 expansion of financial incomes and financial investments is concurrent with an expansion in gross debt on NFC balance sheets (see Section ), suggesting that – at least at the sector‐level – firms are not constrained in new borrowing. In this context, ‘crowding out’ – or what Kliman and Williams () term ‘diversion’ of the share of profits invested in production towards financial uses – need not have taken place.…”

Section: Firm Financial Behaviour and Investmentmentioning

confidence: 99%

“…In presenting this part of the literature, I emphasize, in particular, this possibility of crowding out. Importantly, more recent analyses do not find conclusive evidence of crowding out (Kliman and Williams, ; Davis, ) and, more generally, the literature emphasizing financial flows is characterized by variability in conclusions. This variability reflects, in part, differences in sample definitions and/or scope of analysis, but also points to a more general limitation of this branch of the literature.…”

Section: Introductionmentioning

confidence: 96%

“…Davis () points to varied relationships between different features of financialization and firm investment rates in the USA, including a positive correlation between financial assets and investment, but a negative effect of shareholder orientation. Kliman and Williams () contend, in contrast, that falling accumulation rates in the USA are wholly unrelated to financialization.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Financialization and Investment: A Survey of the Empirical Literature

Davis

2017

Journal of Economic Surveys

View full text Add to dashboard Cite

An expanding literature analyses the implications of the post‐1980 expansion of finance in advanced economies – a process summarized as ‘financialization’ – for capital accumulation. This paper surveys the empirical literature on financialization and investment to take stock of where we are and to identify questions for further research. Because ‘financialization’ is widely recognized to be ambiguously defined, I first introduce empirical indicators of financialization in this literature. This categorization elucidates three approaches to measuring financialization in the context of investment. The first two approaches emphasize rising income flows between nonfinancial corporations (NFCs) and finance: first, growth in NFCs’ financial incomes and, second, growth in NFCs’ payments to creditors and shareholders. Rising financial profits are, notably, widely used to suggest financial assets and incomes ‘crowd out’ physical investment. I contend that these flow‐based indicators of financialization capture important relationships between changes in firm financial behaviour and investment, but also raise questions about determinants underlying NFCs’ changing portfolio and financing decisions. The third approach to defining financialization emphasizes the best‐developed behavioural explanation linking financialization to reduced investment: shareholder value orientation. In future research, scope remains for further attention to behavioural drivers of the empirical trends summarizing financialization.

show abstract

Section: Defining Financializationmentioning

confidence: 99%

Section: Firm Financial Behaviour and Investmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Financialization and Investment: A Survey of the Empirical Literature

Davis

2017

Journal of Economic Surveys

View full text Add to dashboard Cite

show abstract

“…Empirically, the primary source of fixed investment is internally generated retained earnings, while externally borrowed funds are mainly used to finance investments that have little to do with the reproduction of the business enterprise (Jo 2015;Kliman and Williams 2015). Is fixed investment functionally related to interest rates?…”

Section: The Coordination Of Economic Activities In the Social Provismentioning

confidence: 99%