Financialization as an Obstacle to Industrialization

C. P. Chandrasekhar
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C. P. Chandrasekhar: Jawaharlal Nehru University

Chapter 5.2 in The Industrial Policy Revolution II, 2013, pp 350-363 from Palgrave Macmillan

Abstract: Abstract No one can deny that finance has a role to play in industrialization. On the other hand, any process, however short term, in which the financial sector feeds on itself to generate extremely high profits, must be inimical to industrialization. Under the latter, the flow of finance into speculation would, however temporarily, raise returns on financial investments well above returns on investment in real assets and dampen the incentive to undertake real investment. Further, in such a regime, credit to purchase financial assets would fetch higher interest and be privileged over credit for real capital formation.

Keywords: Interest Rate; Stock Market; Real Estate; Central Bank; Financial System (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-137-33523-4_14

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DOI: 10.1057/9781137335234_14

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