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What is the matter with finance? A historical analysis of the change in US banking practices since 1970

Arnoldsson, Jens LU (2017) EKHK18 20171
Department of Economic History
Abstract
This paper follows changes in US banking practices since financial growth de-coupled from the real economy in 1970s, a phenomenon referred to as financialisation in post-Keynesian and Marxian literature. It is argued that financialisation is a consequence of decades of financial deregulation and neoliberal policies, that has given rise to shareholder value-oriented management structures and complex financial instruments, that makes possible and legitimises banking practices that are harmful to the economy. It is concluded that banking has become more about collecting fees and moving risk than about financing productive investments, and the subprime credit crisis is used as an example of how banks targeted the working poor with predatory... (More)
This paper follows changes in US banking practices since financial growth de-coupled from the real economy in 1970s, a phenomenon referred to as financialisation in post-Keynesian and Marxian literature. It is argued that financialisation is a consequence of decades of financial deregulation and neoliberal policies, that has given rise to shareholder value-oriented management structures and complex financial instruments, that makes possible and legitimises banking practices that are harmful to the economy. It is concluded that banking has become more about collecting fees and moving risk than about financing productive investments, and the subprime credit crisis is used as an example of how banks targeted the working poor with predatory measures in order to extract wage surplus from the industrial circulation into the financial circulation, it is furthermore concluded that such behaviour is pro-cyclical. (Less)
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author
Arnoldsson, Jens LU
supervisor
organization
course
EKHK18 20171
year
type
M2 - Bachelor Degree
subject
keywords
financialisation, predatory banking, subprime credit crisis, financial instability, shareholder value, USA
language
English
id
8917161
date added to LUP
2017-06-21 08:45:24
date last changed
2017-06-21 08:45:24
@misc{8917161,
  abstract     = {This paper follows changes in US banking practices since financial growth de-coupled from the real economy in 1970s, a phenomenon referred to as financialisation in post-Keynesian and Marxian literature. It is argued that financialisation is a consequence of decades of financial deregulation and neoliberal policies, that has given rise to shareholder value-oriented management structures and complex financial instruments, that makes possible and legitimises banking practices that are harmful to the economy. It is concluded that banking has become more about collecting fees and moving risk than about financing productive investments, and the subprime credit crisis is used as an example of how banks targeted the working poor with predatory measures in order to extract wage surplus from the industrial circulation into the financial circulation, it is furthermore concluded that such behaviour is pro-cyclical.},
  author       = {Arnoldsson, Jens},
  keyword      = {financialisation,predatory banking,subprime credit crisis,financial instability,shareholder value,USA},
  language     = {eng},
  note         = {Student Paper},
  title        = {What is the matter with finance? A historical analysis of the change in US banking practices since 1970},
  year         = {2017},
}