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Financial Globalization, Social Exclusion and Financial Crisis

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  • Gary Dymski

Abstract

This paper suggests one set of mechanisms that ties financial globalization processes to local dynamics of financial inclusion or exclusion. Specifically, this paper explores the worldwide reconsideration of financial firms' strategies that has accompanied financial globalization. It is shown that the neoliberal and asymmetric-information approaches to credit markets and financial crises in developing economies overlook these dimensions of financial globalization because of their tendency to focus on representative credit markets. Banks' strategic shift has led to the global homogenization and stratification of financial practices—and this in turn has been a key driver of processes of financial exclusion. Financial exclusion then involves bifurcation within financial markets, so that different markets serve different portions of the household and business population. This analysis suggests a reconstruction of Minsky's microfoundational model of the origins of financial fragility and crisis, which shifts from Minsky's emphasis on a representative borrower-lender relationship to a situation of borrower-lender relationships in bifurcated markets.

Suggested Citation

  • Gary Dymski, 2005. "Financial Globalization, Social Exclusion and Financial Crisis," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(4), pages 439-457.
  • Handle: RePEc:taf:irapec:v:19:y:2005:i:4:p:439-457
    DOI: 10.1080/02692170500213319
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    References listed on IDEAS

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    1. Pablo Bustelo & Clara Garcia & Iliana Olivie, 1999. "Global and Domestic Factors of Financial Crises in Emerging Economies: Lessons from the East Asian Episodes (1997-1999)," Working Papers 002, Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales.
    2. Knight, Malcolm, 1998. "Developing Countries and the Globalization of Financial Markets," World Development, Elsevier, vol. 26(7), pages 1185-1200, July.
    3. Malcolm D. Knight, 1998. "Developing Countries and the Globalization of Financial Markets," IMF Working Papers 98/105, International Monetary Fund.
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    Cited by:

    1. Andrew M. Fischer, 2011. "Reconceiving social exclusion," Brooks World Poverty Institute Working Paper Series 14611, BWPI, The University of Manchester.
    2. Simpson, Wayne & Buckland, Jerry, 2009. "Examining evidence of financial and credit exclusion in Canada from 1999 to 2005," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 966-976, December.

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