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Published online by Cambridge University Press: 23 January 2024
In this chapter I set out the ways in which the financial sector has evolved and expanded over the past three to four decades and enquire into variations in the rate of expansion since the GFCs. In the discussion, it is evident that the developments in the financial sector conform to the working definition of financialization in terms of an increasing role for financial markets, financial actors and financial institutions. There has been a general substantial growth of the financial sector but the rates of growth vary widely across countries, which is perhaps not surprising in light of the differences in the scale of the financial sector at the beginning of the 1980s in different countries. In comparing the growth of the sector across a range of developed countries we can assess the extent to which there has been a convergence between the financial systems. The differences, which are revealed below, within the general processes of financialization are termed “variegated financialization”.
The statistics in this chapter relate to what are termed by the International Monetary Fund (IMF) and others as advanced economies, with DEEs considered in the next chapter. The statistics are presented (where available) for each of the G7 countries. As far as the available data permit, the coverage of the data starts around 1980, although it will be seen that many of the data series (at least on a consistent basis) do not start until the mid-1990s.
In setting out the characteristics of financialization, this chapter is limited to quantitative measures relating to industrialized economies. Financial liberalization and deregulation of the financial sector, as part of the neoliberal agenda, has been a feature of the present era of financialization, at least through to the GFCs of 2007– 09, and this is documented and discussed in Chapter 6.
Scale and structure of the financial sector
The features of financialization include the rapid growth of financial institutions and their assets and liabilities, the growth of financial markets, including equity markets,and a tendency for markets to grow faster than financial institutions. There is a proliferation of types of financial assets through derivatives and securitization, and the growth of futures markets in an extended range of items. In basic terms this is “the capitalization of almost everything” (Leyshon & Thrift 2007).
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