- New Directions in Modern Economics series
Chapter 2: Stylized Facts
In the ﬁrst chapter, I opted for a deﬁnition of ﬁnancialization at two distinct levels. At the most general level, it refers to an increase in the size, proﬁtability and signiﬁcance of the ﬁnancial sector. At the NFC level, ﬁnancialization is deﬁned as the increase in both ﬁnancial investments and hence ﬁnancial incomes of NFCs and the increase in the amount of payments to ﬁnancial markets. Here, I present detailed descriptive statistics that demonstrate these ﬁnancialization trends of the post-1980 era in the US economy at both levels. These data show a continuous increase in the size and proﬁtability of the ﬁnancial sector, a secular growth in the volume of ﬁnancial transactions, as well as ﬁnancialization of NFCs. Before moving onto a discussion of the historical context of ﬁnancialization and the theories that attempt to explain this process, it is important to depict what has actually changed in the last decades. Since the 1980s, world ﬁnancial markets have been growing rapidly. The value of total global ﬁnancial assets (equities, government and corporate debt securities and bank deposits) reached to 140 trillion dollars by the end of 2005 from 12 trillion in 1980, 64 trillion in 1995 and 93 trillion in 2000. Stock of global ﬁnancial assets was 338 percent of the global Gross Domestic Product (GDP) in 2005, up from 109 percent in 1980 (Farrell et al. 2007: 8). For the US economy, the stock of ﬁnancial assets reached 303 percent of the GDP in...
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