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How much does finance benefit society?

Author

Listed:
  • Giancarlo Bertocco

    (University of Insubria)

  • Andrea Kalajzic

Abstract

The financial crisis that erupted in 2007 has generated feelings of deep aversion towards finance among the public. Zingales (2015) urges the economics profession not to underestimate these feelings, noting that economists tend to overestimate the benefits of finance and to ignore that the 'best form of finance' is accompanied by a 'bad type of finance'. The problem with these statements is that the macroeconomic theory elaborated over the last decades is unable to provide a satisfactory explanation for the coexistence of these two forms of finance. The aim of this work is to present a sound explanation of the distinction between good and bad finance, based on: i) Keynes's distinction between enterprise and speculation; ii) Schumpeter analysis of the role of bank money in a capitalist economy.

Suggested Citation

  • Giancarlo Bertocco & Andrea Kalajzic, 2018. "How much does finance benefit society?," PSL Quarterly Review, Economia civile, vol. 71(287), pages 419-437.
    • Handle: RePEc:psl:pslqrr:2018:43
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    File URL: https://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/14067/pdf
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    References listed on IDEAS

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    Cited by:

    1. Stefano Di Bucchianico, 2020. "A note on financialization from a Classical-Keynesian standpoint," Department of Economics University of Siena 824, Department of Economics, University of Siena.

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    More about this item

    Keywords

    good finance; bad finance; enterprise; speculation;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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