Financialization at the international level: evidence from emerging market economies

Abstract

The paper focuses on the manifestations of financialization in the international sphere, which it defines as the increasing magnitude of finance and its decoupling from earlier functions and logic as the speculative motive is strengthened. With financialization the motive of finance is no longer to finance trade and production but to accumulate wealth, which in emerging market economies (EMEs) takes place through innovative products and practices that have in common the focus on exchange rate returns, resulting in a strengthened speculative motive. The article reviews the financialization literature highlighting how the different closed-economy aspects impact the international sphere. It conducts empirical analyses based on the financial integration of a country and on the characteristics of its currencies’ FX markets to assess the presence of financialization and its characteristics among EMEs, indicating certain countries where this process is more intense.

Financialised capitalism and the subordination of emerging capitalist economies

“…For example, the Post Keynesian literature on currency hierarchy and subordinate financialisation emphasises the severe constraints on domestic agency as a result of financial integration, but fails to consider the persistent value transfer underpinning global capitalism (e.g. Ramos, 2017;Kaltenbrunner and Painceira, 2018).…”

Miradas de la crisis contemporánea: la Gran Recesión 2008-2009

“…El término financiarización tiene muchas acepciones y su análisis se ha robustecido en la época contemporánea (Vega, 2017;Rodrigues y Palludeto, 2018;Vega et al, 2019). Así, Ramos (2017) proporciona una interesante categorización de los enfoques de estudio: la relación cambiante entre las finanzas y otros sectores económicos, los cambios dentro del sistema financiero y la creciente magnitud de las finanzas a nivel internacional. La literatura marxista se centra en la tercera categoría.…”

Economic Policy Uncertainty and Emerging Stock Market Volatility

“…Second, economic policy uncertainty in large bilateral trade partner countries generates massive capital inflows and outflows that could be the source of financial uncertainties in host countries ( Cross & Poon, 2020 ; Julio & Yook, 2012 ). Moreover, due to globalization and liberalization, the correlation and information exchange between emerging and developed stock markets are more rapid and robust ( Dong & Yoon, 2019 ; Mishkin, 2009 ; Purohit et al, 2019 ; Ramos, 2017 ). Therefore, along with the internal EPU indexes for Pakistan, we are using the EPU indexes for three major trading partners: the US, China, and the UK (trading shares of US exports: 16.97%, $US 3.8 billion; China: 8.58%, $US 1.8 billion; and UK: $US 1.7 billion 7.8%, $1.7 billion with Pakistan) 1 to determine whether the EPU indices for these economies have any substantial impact on the Pakistan equity market volatility.…”