Have We Been Here Before? Phases of Financialization within the 20th Century in the United States
Levy Economics Institute, Working Papers Series No. 869
39 Pages Posted: 27 Jun 2016 Last revised: 28 Aug 2016
Date Written: June 27, 2016
This paper explores from a historical perspective the process of financialization over the course of the 20th century. We identify four phases of financialization: the first, from the 1900s to 1933 (early financialization); the second, from 1933 to 1940 (transitory phase); the third, between 1945 and 1973 (definancialization); and the fourth period begins in the early 1970s and leads to the Great Recession (complex financialization). Our findings indicate that the main features of the current phase of financialization were already in place in the first period. We closely examine institutions within these distinct financial regimes and focus on the relative size of the financial sector, the respective regulation regime of each period, and the intensity of the shareholder value orientation, as well as the level of financial innovations implemented. Although financialization is a recent term, the process is far from novel. We conclude that its effects can be studied better with reference to economic history.
Keywords: Financialization, Monetary Regimes, Speculation
JEL Classification: E42, Ε44, Β52
Suggested Citation: Suggested Citation