Financialisation and Investment Behaviour Among Non-Financial Corporations in Brazil Since the Global Crisis

Gottschalk, Ricardo; Torija-Zane, Edgardo

doi:10.1007/978-3-319-64885-9_7

Cited by 2 publications

(2 citation statements)

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“…The features of financialization identified regard to the decreasing investment in fixed assets and operating profit, while the financial income and dividends payment increased. This pattern of behavior distinguishes from the reported by Gottschalk and Torija-Zane (2017) during the great financial crisis, what is crucial to understand the different responses of the Brazilian economy when facing the recessions of 2008 and 2015-2016. Therefore, we understand that the recession of 2015-2016, combined with the adverse macroeconomic context, has deepened the financialization of non-financial companies which, in turn, inhibited the recovery of the Brazilian economy and the resumption of a positive economic cycle.…”

Section: Discussionmentioning

confidence: 81%

“…Capital markets are still incipient in Latin America, which means that corporate governance and the usual features of financialized companies are not widespread practices. 3 Gottschalk and Torija-Zane's (2017) research is relevant reference concerning investigating investment behavior and financialization in non-financial corporations in Brazil. The authors look into the behavior of Brazilian listed corporations focusing on the 2008-2015 period to evaluate to what extent and in which ways financialized practices have taken hold among Brazil's large corporations (p. 162).…”

Section: Introductionmentioning

confidence: 99%

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Why has the Brazilian economy stagnated in the 2010s? A Minskyan analysis of the behavior of non-financial companies in a financialized economy

Mantoan

Centeno

Feijó

2021

Rev Evol Polit Econ

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The Brazilian economy entered a deep recession in 2015–2016 and since then has shown a sluggish recovery. In this paper, we offer an interpretation for the slow growth based on Minsky’s financial instability hypothesis and recent literature on financialization and growth. We analyze the balance sheet of large non-financial companies over the period 2012–2019, a period that comprises the positive investment cycle—initiated during the commodities boom which lasted from the second half of the 2000s until 2014—the 2015–2016 recession, and the period preceding the shock of the COVID-19 pandemic. Based on Minsky’s taxonomy of financial profiles, we map a proxy for financial instability at the firm level based on Davis et al. (2019). We also propose an aggregate financial stability index. We conclude that after the 2015–2016 recession, companies have been restructuring their debt profile and adopting a defensive behavior, increasing their liquidity preference. Our analysis supports the interpretation that, even with the sharp fall in domestic real interest rates, the degree of confidence on expectations to recover investment in productive assets is low. This corroborates with the thesis that agents’ decisions do not respond only to supply stimulus, but are guided by expectations of future returns, which fundamentally depend on the performance of aggregate demand. Since 2015, Brazilian economic policy has been driven by fiscal consolidation, which has proven ineffective in increasing economic growth.

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Section: Discussionmentioning

confidence: 81%

Section: Introductionmentioning

confidence: 99%