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Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies

Author

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  • Ewa Karwowski
  • Engelbert Stockhammer

Abstract

Financialisation research has originally focussed on the US experience, but the concept is now increasingly applied to emerging economies (EMEs). There is a rich literature stressing peculiarities of individual country experiences, but little systematic comparison across EMEs. This paper fills this gap, providing an overview of the debate and identifying six financialisation interpretations for EMEs. These different interpretations stress (1) financial deregulation (2) foreign financial inflows, (3) asset price volatility, (4) the shift from bank-based to market-based finance, (5) business debt, and (6) household indebtedness. We construct and compare measures of the six financialisation interpretations across a sample of 17 EMEs from Latin America, emerging Europe, Africa and Asia, contrasting them with the US and UK, two financialised economies. We find considerable variation in financialisation experiences of EMEs. Asset price volatility is found across continents. Asia has been more exposed to capital inflows, stock markets have gained importance and private sector debt risen. In emerging Europe financial deregulation has been more pronounced with lower levels but strong increases in household debt. The picture is similar in South Africa, the African EME in the sample, where household debt is comparatively high. Financialisation in Latin America is weaker according to our measures.

Suggested Citation

  • Ewa Karwowski & Engelbert Stockhammer, 2016. "Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies," Working Papers PKWP1616, Post Keynesian Economics Society (PKES).
  • Handle: RePEc:pke:wpaper:pkwp1616
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Daniele Tori & Özlem Onaran, 2017. "Financialisation and physical investment: a global race to the bottom in accumulation?," Working Papers PKWP1707, Post Keynesian Economics Society (PKES).
    2. Karwowski, Ewa, 2017. "Corporate financialisation in South Africa: From investment strike to housing bubble," Economics Discussion Papers 2017-7, School of Economics, Kingston University London.
    3. Tori, Daniele & Onaran, Özlem, 2017. "The effects of financialisation and financial development on investment: evidence from firm-level data in Europe," Greenwich Papers in Political Economy 16089, University of Greenwich, Greenwich Political Economy Research Centre.

    More about this item

    Keywords

    financialisation; emerging markets; financial instability; asset price volatility; heterodox economics;

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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