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Financialisation embroils developing countries

Author

Listed:
  • Costas Lapavitsas

    (SOAS.)

Abstract

Financialisation of developed countries includes increased lending to individuals as well as adoption of investment banking by commercial banks, thus contributing directly to the crisis of 2007-9. Financialisation has acquired an international aspect since the 1990s, primarily through liberalised capital flows. In the 2000s international financialisation has resulted in net capital flows from developing to developed countries, thus imposing substantial costs on the former, while subsidising the USA as leading issuer of quasiworld- money. International financialisation has also spurred domestic financialisation in developing countries through development of bond markets and foreign bank entry. Developing countries have been drawn into the crisis as current accounts declined and short-term capital flows were reversed.

Suggested Citation

  • Costas Lapavitsas, 2009. "Financialisation embroils developing countries," Papeles de Europa, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Estudios Internacionales (ICEI), vol. 19, pages 108-139.
    • Handle: RePEc:ucm:padeur:v:19:y:2009:p:108-139
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    File URL: https://eprints.ucm.es/id/eprint/68222/1/2009-19(108-139).pdf
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    Cited by:

    1. Cibils, Alan & Allami, Cecilia, 2013. "Financialisation vs. Development Finance: the Case of the Post-Crisis Argentine Banking System," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 13.

    More about this item

    Keywords

    Financialization; Crisis; Capital flows; Developing countries.;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • F30 - International Economics - - International Finance - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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