Nonfinance firms increasingly derived income from financial markets

Evidence

In contrast to the attention received by the finance sector in both the public and the academic spheres, few explore the financialization of the nonfinance sector. This article focuses on the second process of financialization, that is, the increasing participation of nonfinance firms in financial markets. Figure 1 presents the ratio of financial income to realized profits for all nonfinance firms and for manufacturing firms from 1970 to 2007. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 18

Categorization

• DEFINE: Defines the paper’s central object: financialization of the nonfinance sector as rising financial income among nonfinance firms.
• XREF: connects to: Nonfinancial firms’ portfolio income relative to cash flow surged by the late 1980s — Greta R. Krippner, The Financialization of the American…, 56; Non-financial firms increasingly resemble financial corporations through revenue reliance — Greta R. Krippner, The Financialization of the American…, 136; Major nonfinancial corporations shifted their earnings toward financial operations — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 45 (+10 more)

Related

• Financialization can be measured by comparing non-financial firms’ portfolio income to their cash flow. (similarity 0.92)
• Financialization comprises both finance-sector dominance and nonfinance firms’ financial investing. (similarity 0.91)
• Nonfinancial firms’ portfolio income relative to cash flow surged by the late 1980s (similarity 0.91)
• Financial profits relative to non-financial profits rose three to fivefold by the late 1990s. (similarity 0.88)
• Nonfinance-firm financialization has received little research attention. (similarity 0.88)
• Nearly 40% of S&P 500 earnings came from financial activities by 2000 (similarity 0.87)
• Stagnating growth plus deregulation pushed firms from production into financial investment (similarity 0.86)
• Nonfinance firms’ financial gains are funded by production-derived cash flows, not new productivity (similarity 0.85)
• Major nonfinancial corporations shifted their earnings toward financial operations (similarity 0.85)
• Corporate spin-offs inflate portfolio income measures independently of financial orientation (similarity 0.84)
• Non-financial firms increasingly resemble financial corporations through revenue reliance (similarity 0.84)
• Financialization does not measurably raise firm profits or financial-asset productivity. (similarity 0.84)
• Financialization is measured as the ratio of financial receipts to business receipts. (similarity 0.83)
• Financialization cannot be reduced to stock market developments. (similarity 0.83)
• Financialization must be measured by profit generation, not employment or output (similarity 0.83)

Broader Connections

• Nonfinancial firms’ portfolio income relative to cash flow surged by the late 1980s #corroborates (0.95) — Greta R. Krippner, The Financialization of the American…, 56
• Major nonfinancial corporations shifted their earnings toward financial operations #corroborates (0.95) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 45
• Non-financial firms increasingly resemble financial corporations through revenue reliance #corroborates (0.92) — Greta R. Krippner, The Financialization of the American…, 136
• Financialization can be measured by comparing non-financial firms’ portfolio income to their cash flow. #expands (0.85) — Greta R. Krippner, The Financialization of the American…, 47
• Corporate spin-offs inflate portfolio income measures independently of financial orientation #complicates (0.80) — Greta R. Krippner, The Financialization of the American…, 90
• Stagnating growth plus deregulation pushed firms from production into financial investment #expands (0.78) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 41
• Nonfinance firms’ financial gains are funded by production-derived cash flows, not new productivity #qualifies (0.72) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 175