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The world region is missing from financialisation analysis of emerging economies (EEs) with little attention given to regional commonalities or comparative analysis across regions. This article sets out to identify regional commonalities in financialisation experiences across EEs, rooted in domestic institutions and countries’ varying integration into the global financial system. Bringing commonalities within and differences between emerging regions to the fore will help us understand the specificities of their political economies and current capitalist experiences. Based on existing research and data availability, six financialisation indicators across five macroeconomic aggregates are identified. Considering 2008–17, a ranking emerges with the most affected region being Central Easter Europe (CEE), followed by Latin America. Emerging Asia takes an intermediate position while EEs in the Middle East and North Africa (MENA) region and Africa show limited signs of financialisation. Our analysis identifies distinct regional features. Financialisation in CEE and Latin America is strongly driven by external forces, the key difference being the role that large domestic capitalists play in the process. Across Emerging Asia, financialisation has mainly unfolded in the private sector while state authorities could to some extent insulate public policy. In MENA, much of the private sector appears outside of the reach of financialisation because of the economic and political power of regional conglomerates. In emerging Africa, the phenomenon is concentrated in very few, if intensely affected, financialisation centres. From a theoretical perspective, we find financialisation is driven by a mix of external factors and domestically influential capitalist elites pursuing their interests.

Post crisis, local governments’ (LGs) budgets have been drastically cut in Britain. Similar budgetary strains had serious consequences in the past, leading to major restructuring in LGs’ functions. This paper interrogates the spatial dynamics of short-term municipal finances by putting into dialogue the political economy perspectives on financialisation with the economic geography literature on urban governance. Using data for over 400 municipal authorities in Britain, we examine locational underpinnings of changing financial practices with respect to spending cuts. We find that austerity increased risk and uncertainty for LGs. To preserve key services in such an environment, they resorted to short-term borrowing in breach of regulatory guidance. Effectively, an internal market for inter-council lending and borrowing has been created based on market principles in which LGs with surplus cash and reserves have extended credit to those with liquidity problems. On the asset side, the austerity programme forced them to embrace financial logics through a spectacular shift from cash and deposit holdings to investment in money market funds and credit extension as they have strived to generate as much income as possible to fund services at risk.

The global Covid-19 pandemic has accelerated a trend under way for the last decade: the enlistment of private-sector commercial finance for development. This finance can be brought in through (1) r...

Financialization has become a popular concept across the social sciences, usually defined as the increasing role of financial motives, financial markets, financial actors, and financial institutions in the operation of the domestic and international economies. Financialization researchers highlight the detrimental consequences of an excessively large and powerful financial sector on economy and society. In South Africa, financialization has been shaped by its colonial and apartheid past, especially the strong links of South African corporations and banks to the international financial centre of London. Low growth and investment, an outcome of the finance-led accumulation regime, have also resulted in the continuity of extreme inequality and high levels of unemployment. In the Global South, financialization mainly affects emerging economies since they possess relatively developed financial markets in comparison to poorer countries. South Africa is the only African economy for which there is a substantial financialization literature. In comparison to other emerging economies, South Africa is relatively strongly financialized as stock market capitalization is extremely high, making Johannesburg one of the top financial centres in the Global South. Furthermore, financial inflows into the country are comparatively large, JSE-listed companies are well integrated into global value chains and household debt is high.

Understanding the nature of state financialisation is crucial to ensure de-financialisation efforts are successful. Therefore, this article provides a structured overview of the emerging literature on financialisation and the state. We define financialisation of the state broadly as the changed relationship between the state, understood as sovereign with duties and accountable towards its citizens, and financial markets and practices, in ways that can diminish those duties and reduce accountability. We then argue that there are four ways in which financialisation works in and through public institutions and policies: adoption of financial logics, advancing financial innovation, embracing financial accumulation strategies and directly financialising the lives of their citizens. Organising our review around the two main policy fields of fiscal and monetary policy, four definitions of financialisation in the context of public policy and institutions emerge. When dealing with public expenditure on social provisions, financialisation most often refers to the transformation of public services into the basis for actively traded financial assets. In the context of public revenue, financialisation describes the process of creating and deepening secondary markets for public debt, with the state turning into a financial market player. Finally, in the realm of monetary policy, financial deregulation is perceived to have paved the way for financialisation, while inflation targeting and the encouragement, or outright pursuit, of market-based short-term liquidity management among financial institutions constitute financialised policies.

© The Author(s) 2018 This is the version of the article accepted for publication in Competition & Change published by SAGE: Karwowski, Ewa and Fine, Ben and Ashman, Samantha (2018) 'Introduction to the special section ‘Financialization in South Africa’.' Competition & Change, 22 (4). pp. 383-387. https://doi.org/10.1177/1024529418791762

This article reveals the processes of financialization in the South African economy by tracing the sources and destinations of non-financial corporations’ liquidity. The paper argues that rather than the volume of non-financial corporations’ financial investment, the composition of financial assets is crucial to assess corporate financialization in the country. Non-financial businesses in South Africa fundamentally transformed their investment behaviour during the 1990s, shifting from more productive uses such as trade credit towards highly liquid and potentially innovative (and therefore risky) financial investment. Following the direction of financial flows the article shows that companies’ financial operations – fuelled by foreign capital inflows – are linked to the price inflation in South African property markets.

The financialisation literature has grown over the past decades. Despite a generally accepted definition, financialisation has been used to describe different phenomena. We distinguish between financialisation of non-financial companies, households and the financial sector and use activity and vulnerability measures. We identify seven financialisation hypotheses in the literature and empirically investigate them in a cross-country analysis for 17 OECD countries and two time periods, 1997–2007 as well as 2008–17. We find different financialisation measures are only weakly correlated, suggesting the existence of distinct financialisation processes. There is strong evidence that financialisation is linked to asset price inflation and correlated with a debt-driven demand regime. Financial deregulation encourages financialisation. There is limited evidence that market-based financial systems are more financialised. Foreign financial inflows do not seem a main driver. We do not find indication that an investment slowdown precedes financialisation. Our findings suggest financialisation should be understood as a variegated process, playing out differently across economic sectors and countries.

Until recently, the deepening of financial markets in developing countries has been widely seen as growth-enhancing. A well-developed capital market – so the argument goes – provides a source of finance for productive investment, thus fostering growth. South Africa possesses one of the oldest stock exchanges among emerging economies, making the country a good case study to scrutinise such growth-enhancing effects. Employing a detailed – and original – analysis of company annual reports and financial statements, this article questions the validity of the growth-enhancing claims made for financial deepening. Although the South African equity market is a source of substantial funds for mining companies, the consequences of their activity do not appear to enhance growth but rather to induce financial fragility. New evidence will show that listed mining companies use financial markets to support their speculation in mining assets. As a consequence, financial funds are channelled into few productive activities ...

This is an Accepted Manuscript of an article published by Taylor & Francis Group in Economic and Political Studies, on 5 February 2017, available online at: https://www.tandfonline.com/doi/full/10.1080/20954816.2016.1274520. Under embargo until 5 July 2018.

Print version: ; Economic crisis and political economy : volume 2 of essays in honour of Tadeusz Kowalik. ; Basingstoke, England ; New York, New York : Palgrave Macmillan, c2014 ; x, 267 pages ; Palgrave studies in the history of economic thought series

Print version: ; Legacy of Rosa Luxemburg, Oskar Lange, and Michal Kalecki. ; Basingstoke, Hampshire : Palgrave Macmillan, c2014 ; ix, 252 pages ; Palgrave studies in the history of economic thought series. ; 9781137335593 ; 2014006803.

Islamic banking is perceived to be at its ‘tipping point’ turning from a niche market phenomenon into a mainstream product (BBC, 2006; Credit Suisse, 2006). Although the total international assets of Islamic banks are still marginal, growth rates are phenomenal especially in the Middle East and Southeast Asia. Yet, Islamic banking seems incomprehensible to most Western economists. As discussed below due to the prohibition of interest and collateral Islamic banking is hardly reconcilable with Western economic theory dominated by the asymmetric information paradigm. Islamic scholars, however, claim that it is superior to conventional banking mainly due to the inherent stability of Islamic banking in reducing economic fluctuations and recurring crisis. The third section shows that these claims are questionable.

This paper explores the significance of Islamic banking in Malaysia for stability in the country's economy as a whole. Neither conventional theory nor Islamic economics puts forward a systematic explanation of financial intermediation; consequently, neither is capable of identifying destabilizing elements in the system. Instead, a flow-of-funds approach similar to Minsky's own is applied to the (post-) modern (consumption-led) business cycle and financial (and asset) market. Malaysia's structural current account surplus contributes to the overcapitalization of domestic firms. This in turn finances a financial (as opposed to an industrial), consumption-led (instead of investment-led) business cycle, where banking favors destabilizing asset price inflation. Islamic banks operating interdependently with conventional ones contribute to economic destabilization, channelling surplus funds from the corporate to the household sector.

This paper explores the significance of Islamic banking in Malaysia for stability in the country's economy as a whole. Neither conventional theory nor Islamic economics puts forward a systematic explanation of financial intermediation; consequently, neither is capable of identifying destabilizing elements in the system. Instead, a flow-of-funds approach similar to Minsky's own is applied to the (post-) modern consumption-led) business cycle and financial (and asset) market.Malaysia's structural current account surplus contributes to the overcapitalization of domestic firms. This in turn finances a financial (as opposed to an industrial), consumption-led (instead of investment-led) business cycle, where banking favors destabilizing asset price inflation. Islamic banks operating interdependently with conventional ones contribute to economic destabilization channeling surplus funds from the corporate to the household sector.

The latest economic crisis shook the previously firm belief in the prosperity-bringing financial sector around the globe. For many months after the catalytic bankruptcy of Lehman Brothers, the economy was in apparent freefall. News about plunging equity, housing, and commodity markets, dried out inter-bank lending, nose-diving industrial production and trade, and rising unemployment have characterized our daily routine. But between all this doom and gloom some parts of the deeply shaken financial sector attempted to promote themselves as bearers of hope for a new, improved, and more stable financial system. Economists, politicians, and clergymen alike increased their efforts during the financial crisis to make the mainstream aware of the advantages of Islamic finance. Islamic financial assets today are believed to barely exceed U.S.$1 trillion, but have been observed to grow in the two-digit area over the last decade [Economist (2008)]. Hence, Islamic finance has its foot in the door of the financial mainstream. The mentioned economists, politicians, and clergymen are helping with the last push to open this door. But what will happen once Islamic finance tumbles into the mainstream? Will we enter an era of new, religion-like belief in stable and prosperity-bringing finance? The announcement in late 2009 by Dubai World, the emirate’s flagship for investment in the region, that it was not able to repay an Islamic bond in time cast fresh doubts on Islamic finance’s claim of inherent stability. This article argues that Islamic finance is not a stable alternative, since Islamic banking in particular and Islamic finance in general do not differ significantly from conventional banking and finance. In the following the reasons for the alleged superiority of Islamic finance will be explored, namely its developmental character, the inherent stability, and the importance it assigns to individuals’morality. Being based on Islamic economics, Islamic finance simply replaces the religion-like belief in the neoclassical dogma of the efficient market with the religiously motivated belief in the morality of the homo Islamicus. The outcome is strikingly similar.

This paper explores the significance of Islamic banking in Malaysia for stability in the country's economy as a whole. Neither conventional theory nor Islamic economics puts forward a systematic explanation of financial intermediation; consequently, neither is capable of identifying destabilizing elements in the system. Instead, a flow- of-funds approach similar to Minsky's own is applied to the (post-) modern consumption-led) business cycle and financial (and asset) market. Malaysia's structural current account surplus contributes to the overcapitalization of domestic firms. This in turn finances a financial (as opposed to an industrial), consumptionled (instead of investment-led) business cycle, where banking favors destabilizing asset price inflation. Islamic banks operating interdependently with conventional ones contribute to economic destabilization channeling surplus funds from the corporate to the household sector.

This vital new Handbook is an authoritative volume presenting key issues in finance that have been widely discussed in the financial markets but have been neglected in textbooks and the usual compilations of conventional academic wisdom.