THE DEMOCRATIZATION OF FINANCE ? PROMISES, OUTCOME AND CONDITIONS

Ismail Erturk, Julie Froud, Sukdev Johal, Adam Leaver and Karel Williams
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Karel Williams: CRESC, The University of Manchester

IBT Journal of Business Studies (JBS), 2006, vol. 2, issue 1, 1-24

Abstract: This paper analyzes the democratization of finance or the promise that all households can make money and/or manage risk by buying appropriate financial services products.It develops a distinctive cultural economy perspective by focusing first on the visions which encourage and rationalize broader and deeper relations between households and the capital market before then exploring the reasons for discrepancy between what is promised and what can be delivered.Our analysis starts from the economic promises and political pitches for the democratization of finance since the early 1990s and the corollary emphasis on promoting mass financial literacy.The article then identifies three key social preconditions which must be satisfied before the promise is delivered and presents evidence and argument which suggests that these conditions are not met because the context is confusing, individuals lackcalculative competence and products are opaque.Under these conditions felicitous outcomes are uncertain for existing middle class savers and very unlikely for lower income groups.

Keywords: Risk Management; Asset Portfolio; Capital Market; Financial Literacy (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:aib:ibtjbs:v:2:y:2006:i:1:p:1-24

DOI: 10.46745/ilma.ibtjbs.2006.21.1

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