Financializing

Financializing refers to the increasing dominance of financial markets, financial motives, financial actors, and financial institutions in the operation of domestic and international economies. This process involves a shift in the importance and influence of finance within economic activity, often leading to a greater focus on short-term financial gains and shareholder value. It can manifest in various ways, including the growth of the financial sector relative to the real economy, the increased complexity and volume of financial transactions, and the integration of financial considerations into non-financial businesses and everyday life.

Key aspects of financialization include the expansion of financial markets for trading assets and derivatives, the rise of institutional investors like pension funds and hedge funds, and the development of new financial products and services. This trend is often associated with deregulation and the globalization of finance, which have facilitated the flow of capital across borders. Critics argue that financialization can exacerbate income inequality, increase economic instability through speculative bubbles and crises, and divert resources from productive investments. Proponents suggest it can improve capital allocation and provide more risk management tools. The concept is a subject of ongoing debate and analysis in economics and sociology.