Financialization: New Palgrave Dictionary

Abstract

“Financialization” is the latest, and probably most widely used term by analysts trying to “name” and understand the contemporary rise of finance and its powerful role in our economy, politics and society. The term had been developed long before the crisis of 2008 but, since the crisis hit, it has become even more popular. This vast and rapidly expanding literature on financialization has a number of important strands. Some of the literature focuses on clarifying the definition of financialization, and assessing whether it is a dominant cause of the ills confronting capitalism or is just a symptom of other, deeper causes; some asks whether financialization is a new “phase” of capitalist development, perhaps a new “mode of accumulation”, or considers whether it is just one among a number of important developments along with “neo-liberalism”, “digitization” and “globalization”; other literature tries to measure the nature and extent of financialization; and still other work attempts to analyze the impact of financialization on important phenomena such as financial crises, productive investment, productivity growth, wages and income distribution; and finally, other literature focuses on policies that can improve finance’s role in the economy. In recent years, the term “financialization” has become popularized and has currency far outside of academia; it has also become less specific and less well defined and, for that reason, may have outlived its usefulness as an academically informative category.