Skip to main content
SpringerLink
Log in

The Neoliberal Financialisation1

  • Chapter
  • First Online:
Crisis and Sustainability

  • 1071 Accesses

Abstract

This chapter investigates causes and consequences of the second surge of financialisation after the Industrial Revolution. The analysis starts from the main changes in finance theory occurred since the early 1970s that provided the foundations for a new policy strategy in finance of neoliberal inspiration. The implementation of the latter produced far-reaching structural transformations in finance that changed the way in which the economic system, not just the financial system, behaves. The analysis of the genesis and the consequences of shadow banking follow. The focus shifts first to a critical discussion of the reform proposals for the shadow banking system and then for the entire financial system. The concluding remarks discuss causes and implications of the delusion of self-regulation in finance in the neoliberal era.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 69.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 89.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 129.00
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Bibliography

  • Adrian, Tobias, Adam B. Ashcraft, Hayley Boesky, and Zoltan Pozsar. 2010. Shadow Banking. In Staff Reports 458. New York: Federal Reserve Bank.

    Google Scholar 

  • Akerlof, George A. 1970. The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics 84(3): 488–500.

    Article  Google Scholar 

  • Bernanke, Ben S., and Mark Gertler. 1989. Agency Costs, Net Worth, and Business Fluctuations. The American Economic Review 79(1): 14–31.

    Google Scholar 

  • Bhagwati, Jagdish. 2004. In Defence of Globalization. New York: Oxford University Press.

    Google Scholar 

  • BIS. 1999. Implications of Repo Markets for Central Banks. Report of a working group of the Committee on the Global Financial System. Basle: Bank for International Settlements.

    Google Scholar 

  • Borghesi, Simone, and Alessandro Vercelli. 2008. Global Sustainability. Social and Environmental Conditions. Palgrave Macmillan: Basingstoke and New York.

    Book  Google Scholar 

  • Brown, Ellen. 2013. The Public Bank Solution. Baton Rouge: Third Millennium Press.

    Google Scholar 

  • Calomiris, Charles W., and R. Glenn Hubbard. 1990. Firm Heterogeneity, Internal Finance, and ‘Credit Rationing’. Economic Journal 100: 90–104.

    Article  Google Scholar 

  • Coase, Ronald H 1960. The Problem of Social Cost. Journal of Law and Economics. 3(3): 1–44.

    Article  Google Scholar 

  • Comotto, Richard. 2010. A White Paper on the Operation of the European Repo Market, the Role of Short-Selling, the Problem of Settlement Failures and the Need for Reform of the Market Infrastructure. Zurich: International Capital Market Association, European Repo Council.

    Google Scholar 

  • Debreu, Gérard. 1959. The Theory of Value: An Axiomatic Analysis of Economic Equilibrium. New York: John Wiley and Sons.

    Google Scholar 

  • Diamond, Douglas W. 1984. Financial Intermediation and Delegated Monitoring. Review of Economic Studies 51: 393–414.

    Article  Google Scholar 

  • Fama, Eugene. 1970. Efficient Capital Markets: A Review of Theory and Empirical Work. Journal of Finance 25: 383–417.

    Article  Google Scholar 

  • Fisher, Irving. 1933. The Debt-Deflation Theory of the Great Depression. Econometrica 1: 337–357.

    Article  Google Scholar 

  • Gorton, Gary B. 2009. Information, Liquidity, and the (Ongoing) Panic of 2007. American Economic Review, Papers and Proceedings 99(2): 567–572.

    Article  Google Scholar 

  • Gorton, ———. 2010. Slapped by the Invisible Hand: The Panic of 2007. New York: Oxford University Press.

    Google Scholar 

  • Gorton, Gary B., and Andrew Metrick. 2010. Regulating the Shadow Banking System. Brookings Papers on Economic Activity 2: 261–297.

    Article  Google Scholar 

  • Griffith-Jones, Stephany, and Avinash Persaud. 2012. Financial Transaction Taxes. Paper Prepared for—and Presented to—the Committee on Economic and Monetary Affairs of the European Parliament in 6th February 2012.

    Google Scholar 

  • ———. 2012. Securitized Banking and the Run on Repo. Journal of Financial Economics 104: 425–451.

    Google Scholar 

  • IMF. 2009. Lessons of the Financial Crisis for Future Regulation of Financial Institutions and Markets and for Liquidity Management Prepared by the Monetary and Capital Markets Department. http://www.imf.org/external/np/pp/eng/2009/020409.pdf. Retrieved 18 November 2015.

  • Joint Forum. 2008. Credit Risk Transfer. Developments from 2005 to 2007. April 2008.

    Google Scholar 

  • Kydland, Finn E., and Edward C. Prescott. 1982. Time to Build and Aggregate Fluctuations. Econometrica 50(6): 1345–1370.

    Article  Google Scholar 

  • Mankiw, Gregory N. 2006. Outsourcing Redux. In Greg Mankiw’s Blog: Random Observations for Students of Economics, May 7. http://gregmankiw.blogspot.co.uk/2006/05/outsourcing-redux.html. Retrieved 2 February 2016.

  • McCulley, Paul A. 2007. Teton Reflections. PIMCO Global Central Bank Focus. https://www.pimco.com/insights/economic-and-market-commentary/global-central-bank-focus/teton-reflections. Retrieved 2 February 2016.

  • Minsky, Hyman P. 1982. Can “It” Happen Again? Essays on Instability and Finance. Armonk, NY: Sharpe.

    Google Scholar 

  • ———. 1986. Stabilizing an Unstable Economy. New Haven and London: Yale University Press.

    Google Scholar 

  • Mishkin, Frederic S. 1991. Asymmetric Information and Financial Crises: A Historical Perspective. In Financial Markets and Financial Crises, ed. R. Glenn Hubbard, 69–108. Chicago: The University of Chicago Press.

    Google Scholar 

  • ———. 2008. Leveraged Losses: Lessons from the Mortgage Meltdown. Speech at the U.S. Monetary Policy Forum, New York, NY, February 29, 2008. https://www.federalreserve.gov/newsevents/speech/mishkin20080229a.htm. Retrieved 7 April 2016.

  • Muth, John F. 1961. Rational Expectations and the Theory of Price Movements. Econometrica 29(3): 315–335.

    Article  Google Scholar 

  • Nesvetailova, Anastasia. 2014. A Crisis of the Overcrowded Future: Shadow Banking and the Political Economy of Financial Innovation. New Political Economy 20(3): 431–453.

    Article  Google Scholar 

  • Omarova, Saule T 2011. From-Leach-Bliley to Dodd-Frank: The Unfulfilled Promise of Section 23A of the Federal Reserve Act. In North Carolina Law Review 89: 1685–1769.

    Google Scholar 

  • Orléan, André. 2009. De l’euphorie à la panique: Penser la crise financière. Paris: Édition de la Rue d’Ulm.

    Google Scholar 

  • ———. 2014. The Empire of Value. A New Foundation for Economics. Cambridge, Mass.: MIT Press.

    Google Scholar 

  • O’Toole, James. 2012. Explaining the Libor interest rate mess. CNNMoneyInvest (July 10, 2012). http://money.cnn.com/2012/07/03/investing/libor-interest-rate-faq/. Retrieved 3 February 2016.

  • Reinhart, Carmen M., and Kenneth S. Rogoff. 2009. This Time is Different, Eight Centuries of Financial Folly. Princeton and Oxford: Princeton University Press.

    Google Scholar 

  • Simon, Herbert. 1957. A Behavioral Model of Rational Choice. In Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting, ed. Herbert Simon. New York: Wiley.

    Google Scholar 

  • Snider, Connan A., and Thomas Youle. 2010. Does the LIBOR Reflect Banks’ Borrowing Costs? Available at SSRN: http://ssrn.com/abstract=1569603 or doi: 10.2139/ssrn.1569603. Retrieved 3 March 2016.

  • SOMO, Centre for Research On Multinational Corporations. 2015. Overview of the Reforms of the Financial System

    Google Scholar 

  • Stiglitz, Joseph E., and Andrew M. Weiss. 1981. Credit Rationing in Markets with Imperfect Information. American Eonomic Review 71(3): 393–410.

    Google Scholar 

  • The Institute for Fiscal Studies. 2011. Poverty and Inequality in the UK: 2011. IFS Commentary C118. London: The Institute for Fiscal Studies.

    Google Scholar 

  • Vercelli, Alessandro. 1991. Methodological Foundations of Macroeconomics. Keynes and Lucas. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • ———. 2011a. A Perspective on Minsky Moments: Revisiting the Core of the Financial Instability Hypothesis. Review of Political Economy 23(1): 49–67.

    Google Scholar 

  • ———. 2013–14. Financialisation in a Long-Run Perspective. International Journal of Political Economy 42 (4):19–46.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. London, UK

    Alessandro Vercelli

Authors
  1. Alessandro Vercelli
    View author publications

    You can also search for this author in PubMed Google Scholar

Copyright information

© 2017 The Author(s)

About this chapter

Cite this chapter

Vercelli, A. (2017). The Neoliberal Financialisation1 . In: Crisis and Sustainability. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-60069-1_6

Download citation

  • DOI: https://doi.org/10.1057/978-1-137-60069-1_6

  • Published:

  • Publisher Name: Palgrave Macmillan, London

  • Print ISBN: 978-1-137-60068-4

  • Online ISBN: 978-1-137-60069-1

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation