FINANCIALIZATION AND STAGNANT CAPITAL ACCUMULATION IN CHINA
Keywords:
Financialization; Capital accumulation; Polynomial inverse lag; China
Abstract
Using the semi-annual data of listed nonfinancial corporations from 2007 to 2015, this paper investigates the effect of financialization on capital accumulation in China. The results show that increased financial profit crowds out real investment, especially for small and private firms. Furthermore, the effect of financialization reverts to be positive in the long run, and its cumulative effect manifests a “U-type” pattern.
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References
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Smith, C.W., Stulz, R.M., 1985. The determinants of firms’ hedging policies. Journal of Financial and Quantitative Analysis, 20(4), 391-405.
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Tornell, A., 1990. Real vs. financial investment: Can Tobin taxes eliminate the irreversibility distortion? Journal of Development Economics, 32(2), 419-444.
Arrighi, G., 1994. The Long Twentieth Century: Money, Power, and the Origins of Our Times. London: Verso Press.
Blundell, R., Bond, S., 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143.
Brown, J.R., Petersen, B.C., 2011. Cash holding and R&D smoothing. Journal of Corporate Finance, 17(4), 694-709.
Chaney, T., Sraer, D., Thesmar, D., 2012. The collateral channel: How real estate shocks affect corporate investment. American Economic Review, 102(6), 2381-2409.
Demir, F., 2009. Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets. Journal of Development Economics, 88(2), 314-324.
Kliman, A., Williams, S., 2015. Why ‘financialization’ hasn’t depressed U.S. productive investment? Cambridge Journal of Economics, 39(1), 67-92.
Lazonick, W., O’Sullivan, M., 2000. Maximizing shareholder value: A new ideology for corporate governance. Economy and Society, 29(1), 13-35.
Mitchell, D.W., Speaker, P.J., 1986. A simple, flexible distributed lag technique: The Polynomial inverse lag. Journal of Econometrics, 31(3), 329-340.
Orhangazi, Ö, 2008. Financialisation and capital accumulation in the non-financial corporate sector: A theoretical and empirical investigation on the US economy: 1973–2003. Cambridge Journal of Economics, 32(6), 863-886.
Smith, C.W., Stulz, R.M., 1985. The determinants of firms’ hedging policies. Journal of Financial and Quantitative Analysis, 20(4), 391-405.
Stockhammer, E., 2004. Financialization and the slowdown of accumulation. Cambridge Journal of Economics, 28(5), 719-741.
Tobin, J., 1965. Money and economic growth. Econometrica, 33(4), 671-684.
Tornell, A., 1990. Real vs. financial investment: Can Tobin taxes eliminate the irreversibility distortion? Journal of Development Economics, 32(2), 419-444.
Published
2018-07-31
How to Cite
Liu, G., & Lee, C.-C. (2018). FINANCIALIZATION AND STAGNANT CAPITAL ACCUMULATION IN CHINA. Buletin Ekonomi Moneter Dan Perbankan, 21(1), 23-32. https://doi.org/10.21098/bemp.v21i1.941
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Articles
Copyright (c) 2018 Chien-Chiang Lee
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
