Exploring firm behaviour as a cause and consequence of financialization

Abstract

This paper sets out to explore financialization from the perspective of firm behaviour. It looks at how financialization has become predominant in the global economy and how firms have adopted financialization as an accumulation regime. Considerations are made whether firm behaviour or changes in firm behaviour have propagated financialization or whether the rise of financialization on a global scale has influenced firms to become more financialized. From the research in this paper, it appears that financialization has in fact influenced firm behaviour, and the increased adoption of financialization by firms has led to its rise and predominance. We can see that under Financialization, firms or large corporations tend to become financial holding firms as they shift from traditional production to dealings in financial transactions for gains, adopting a “downsize and redistribute” technique.