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Cambridge Journal of Economics Advance Access published online on April 9, 2008
Cambridge Journal of Economics, doi:10.1093/cje/ben009
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© The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Financialisation and capital accumulation in the non-financial corporate sector

A theoretical and empirical investigation on the US economy: 1973–2003

Özgür Orhangazi*

* Roosevelt University, Chicago. I would like to thank James Crotty, Robert Pollin, Léonce Ndikumana, Mathiey Dufour, Arjun Jayadev and two anonymous referees for insightful comments on earlier drafts of this paper. Any errors remain mine

Address for correspondence: Department of Economics, Roosevelt University, 430 S. Michigan Avenue, Chicago, IL 60605, USA; email: oorhangazi{at}roosevelt.edu

I discuss the impact of financialisation on real capital accumulation in the US. Using data from a sample of non-financial corporations from 1973 to 2003, I find a negative relationship between real investment and financialisation. Two channels can help explain this negative relationship: first, increased financial investment and increased financial profit opportunities may have crowded out real investment by changing the incentives of firm managers and directing funds away from real investment. Second, increased payments to the financial markets may have impeded real investment by decreasing available internal funds, shortening the planning horizons of the firm management and increasing uncertainty.

Key Words: Financialisation • Capital accumulation • Corporate governance • Investment • Financial markets

JEL classification: E2, D2, G2, G3

Manuscript received March 5, 2007; final version received February 6, 2008.


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