Financialization and the slowdown of accumulation

Engelbert Stockhammer

Publication: Working/Discussion PaperWU Working Paper

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Abstract

Over the past decades financial investment of non-financial businesses has been rising and accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for USA, UK, France, and Germany. Extensive test of robustness are performed. For the first three countries evidence that confirms the negative effect of financialization on accumulation is found. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherInst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business
Publication statusPublished - 2000

Publication series

NameWorking Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"
No.14

WU Working Paper Series

  • Working Papers Series \ Growth and Employment in Europe Sustainability and Competitiveness

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