Financialization shifts capital intermediation from institutions to markets.

Evidence

Financialization refers to the increasing importance of finance, financial markets, and financial institutions to the workings of the economy. This article reviews evidence on the causes and consequences of financialization in the United States and around the world, with particular attention to the spread of financial markets. Researchers have focused on two broad themes at the level of corporations and broader societies. First, an orientation toward shareholder value has led to substantial changes in corporate strategies and structures that have encouraged outsourcing and corporate dis-aggregation whileincreasingcompensationatthetop.Second,financializationhasshaped patterns of inequality, culture, and social change in the broader society. Underlying these changes is a broad shift in how capital is intermediated, from financial institutions to financial markets, through mechanisms such as securitization (turning debts into marketable securities). Enabled by a combination of theory, technology, and ideology, financialization is a potent force for changing social institutions. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 5

Categorization

• DEFINE: Gives a compact, precise definition of financialization and names its core mechanism (securitization) and drivers (theory, technology, ideology).
• XREF: The ‘institutions to markets’ intermediation shift echoes the varieties-of-capitalism literature and connects to how the reader’s finance survey frames regime change. — connects to: Financialization weakened rather than strengthened individual financial institutions — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 106; Financialization’s core is markets displacing institutions via information. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 18; Financialization ultimately represents markets displacing social institutions as society’s organizing principle. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 98 (+4 more)

Related

• Financialization ultimately represents markets displacing social institutions as society’s organizing principle. (similarity 0.93)
• Financialization’s core is markets displacing institutions via information. (similarity 0.90)
• Financial markets reshaped households, corporations, and states over the past 30 years. (similarity 0.85)
• Financialization marks a decisive shift from production-based to finance-driven accumulation. (similarity 0.85)
• Financialization shifted corporate power from manufacturing and marketing executives toward financial executives. (similarity 0.84)
• Financialization scholarship spans three approaches with distinct analytic foci. (similarity 0.84)
• Financialization does not yield uniform convergence across national contexts. (similarity 0.84)
• The US economy became increasingly financialized in the post-1970s period. (similarity 0.83)
• Financialization resulted from deliberate deregulatory political choices, not market forces. (similarity 0.83)
• Financialization lacks rigorous empirical evidence defining its timing and magnitude (similarity 0.83)
• Financialization has competing explanations from three distinct scholarly disciplines. (similarity 0.83)
• Financialization is a pattern of accumulation dominated by financial channels over trade and production (similarity 0.83)
• Securitization transforms debt from a personal bank relationship into an abstract market connection (similarity 0.83)
• Financialization theory rejects bank dominance in favor of integrated finance-industrial capital (similarity 0.83)
• Financialization accelerated through 1970s-80s deregulation and state support (similarity 0.83)

Broader Connections

• Financialization’s core is markets displacing institutions via information. #corroborates (0.92) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 18
• Financialization weakened rather than strengthened individual financial institutions #complicates (0.75) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 106
• Financialization ultimately represents markets displacing social institutions as society’s organizing principle. #expands (0.72) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 98