Financialisation in developing countries: Approaches, concepts, and metrics

Financialisation in developing countries has been extensively researched but its characteristic features and its relationship to developed countries remain unclear. Drawing on a review of the literature, this paper shows, first, that it should be distinguished from financial liberalisation and globalisation. Two fundamental theoretical approaches are subsequently considered, which establish its derivative character relative to developed countries, namely ‘subordinate’ and ‘dependent’ financialisation. The paper then demonstrates its characteristic features by examining the empirical literature, including the use of metrics. Financialisation in developing countries is highly variable and different from that in developed countries regarding the conduct of non-financial enterprises, banks, and households. It is also a source of economic vulnerability.