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Financialisation in Emerging Economies: A Systematic Overview and Comparison with Anglo-Saxon Economies

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  • Karwowski, Ewa

    (Kingston University London)

  • Stockhammer, Engelbert

    (Kingston University London)

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

  • Karwowski, Ewa & Stockhammer, Engelbert, 2016. "Financialisation in Emerging Economies: A Systematic Overview and Comparison with Anglo-Saxon Economies," Economics Discussion Papers 2016-11, School of Economics, Kingston University London.
    • Handle: RePEc:ris:kngedp:2016_011
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    More about this item

    Keywords

    financialisation; emerging markets; financial instability; asset price volatility; heterodox economics;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • F30 - International Economics - - International Finance - - - General
    • 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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