GEOG 4 Lecture Notes - Lecture 5: Emerging Markets, Financialization, Capital Market
Document Summary
Financialization is a process in which financial firms and institutions increasingly gain more profits by investing in financial markets, rather than engaging in the traditional flows of trade, and production of goods and services. The growing influence of financial markets can be seen in all sectors of the economy, it is especially reflected in the expansion of banks, brokerages, and other financial institutions. Even, non-financial based firms have turned to the financial markets to overcome declining returns on investments due to increased competition from international firms. These non-financial firms are able to capture greater profits by withdrawing capital from production and investing more into the financial market. Also, due to the hyper-mobility of the flow of capital and the process of financialization, as firms gain influence in the financial market they are able to acquire significant political and economic power.
