Financial Actors Research Articles

The role of temporal perspective in economical activity – psychological perspective

The article aims to explore the ralationship between different financial behaviours and temporal perspective. Psychological time is defined and measured in different ways. In the studies presented in the current paper a concept by Philip Zimbardo and John Boyd (2009) was used. It distinguishes five temporal perspectives: (a) past-positive, (b) past-negative, (c) present-hedonistic, (d) present-fatalistic, (e) future. In order to measure this construct, a 15-item short version of Time Perspective Inventory (Short Zimbardo Time Perspective Inventory, SZTPI, Zhang, Howell, Bowerman, 2013) was used. Two experiments using representative (of Polish society) samples were carried out (numbers of participants were 360 and 1090). Different financial behaviours were measured: saving, investing, insurance, and loan raising. Also, their relationship with temporal perspective was looked at (SZTPI). The results revealed a relationship between temporal perspective and financial actions: a higher level of hedonistic-present perspective encouraged cash loans, and a higher level of future perspective was associated with mortgages. Future perspective was beneficial in terms of saving and insurance. High level of fatalistic-present perspective encouraged financial passivity

Constructing a New Asset Class: Property-led Financial Accumulation after the Crisis

abstractThis article is concerned with new modes of property-led financial accumulation emerging in the wake of the 2008 financial crisis. Focusing on the United States, the article traces the creation of an asset class derived from securitizing the rental income of foreclosed homes turned rental properties. The study strategically combines conceptual agendas often pursued separately. Theories of market formation rooted in science and technology studies inform the method of analysis so as to attend to the work of realizing markets, the role of calculative devices in market formation, and the contingent and conditional aspects of markets. This analysis reveals the single-family rental (SFR) asset class as a practical accomplishment. However, a broader framework rooted in political economy is necessary to attend to the broader significance of the SFR asset class in terms of power, politics, and the dynamics of capital accumulation. The article particularly focuses upon the historical and geographic contingencies making it possible to conceive of a large-scale SFR market, the work of state and capital market actors in reframing repossessed single-family homes as rental properties and the role calculative practices played in this process, and the strategies of issuers and credit rating agencies to frame a novel asset class for institutional investors. The SFR asset class affirms the fundamental role for housing in the ideology of capital, and speaks to new entanglements of financial actors and home life as financial accumulation is adjusted to the postcrisis context. Beyond shedding light on postcrisis housing financialization, the article demonstrates how economic geographers can carefully integrate theoretical perspectives to critically examine both the circumstances of market formation and the social, spatial, and political consequences of markets.

Vulnerable yet relevant: the two dimensions of climate-related financial disclosure

Market-based solutions to climate change are widely advocated by financial actors and policy makers in order to foster a smooth transition to a low-carbon economy. A first important limiting factor to this approach is widely recognized to be the imperfect information on investors’ portfolios’ exposure to climate-related risks. While better disclosure of climate-relevant information is often recommended as a remedy, the current lack of concise and comparable measures of portfolios’ exposure to climate risk fails to provide major investors with the full incentives to reallocate their portfolios. A second limiting factor arises from the fact that in the context of the low-carbon transition, it is not clear how to measure the market share of participants because many economic sectors produce greenhouse gases (GHG) emissions or induce them along the supply chain. The lack of common and concise measures of the relevant market share hampers the ability of policy makers to ensure fair competition policies and the ability of major investors to assess the effects of their own and their competitors’ portfolio reallocation. To address these two gaps, we propose two novel and complementary indices: (i) the “GHG exposure,” capturing the exposure of single investors’ portfolios to climate transition risks, and (ii) “GHG holding,” capturing the market share of each financial actor weighted by its contribution to GHG emissions. We illustrate the use of the indices on a dataset of portfolios of equity holdings and loans in the Euro-Area, and we discuss the policy implications for the low-carbon transition.

Country of Origin Effects and New Financial Actors: Private Equity Investment and Work and Employment Practices of French Firms

AbstractThis is a study of the effects of alternative investors on a range of work and employment practices in France, paying specific attention to whether investors are indigenous or not. We use data from a detailed survey of French firms, and set our research in the context of the literature on comparative capitalisms. We find that private equity (PE) investments from abroad are associated with greater job insecurity, less spending on training and lower wages, but French PE investments are not. We explore the reasons behind this variation and the implications for theory and practice.

Governing urban vacancy in post-crash dublin: contested property and alternative social projects

ABSTRACTThe scale and severity of property crashes following the global financial crisis has made vacancy a more visible and politically significant feature of cities. Although research has focused on urban experiments in vacant spaces, there has been less emphasis on how the contested property relations around vacancy remake urban governance. In this paper, we argue that debates about vacancy have been a central concern in post-crisis urban governance. In the first part of the paper we draw two conceptual approaches into a dialogue and apply them to an analysis of vacant space: that of Nicholas Blomley on property and Elizabeth Povinelli on “alternative social projects”. In the second part of the paper, we critically analyse how three groups discursively construct the need to “activate” and “re-use” vacant spaces in Dublin: grassroots groups, urban policy-makers, and financial actors. We argue that governing vacancy will be a key feature of post-crisis urbanisation.

Taxing stock transfers in the first golden age of financial capitalism: political salience and the limits on the power of finance

AbstractThe current debate about taxing financial transactions is often presented as a brand new one. It is not. At the turn of the 19th century, a similar tax was debated in France and the US Financial actors fought the tax mightily. Those actors were very powerful. Yet, they lost. A tax on stock transfers (STT) was established. Why? Through a comparative analysis of France and the State of New York, this article argues that the tax was adopted because politicians interested in capitalizing on public discontent endeavored to publicize and frame the STT in simple and antagonizing terms. Strong but heterogeneous public hostility against finance got focused on the explicitly politicized issue of the tax. Political salience disrupted the logics of ‘quiet politics’ and momentarily undermined the privileged position of finance. Despite intense lobbying and threats to relocate from financiers, elected officials chose to vote for the STT.

Finance and sustainability: From ideology to utopia

This paper is based on the observation that there is a contradiction between the current demands for sustainability and the way the financial system works. Beginning with a discussion of the epistemological assumptions underlying financial theory, it seeks to show how it may be viewed as an Ideology for the financialization of economies and societies. We use the Ricoeurian notion of the cultural imagination to develop a counterpoint Utopia, which we call Finance As A Common. The reflexivity enabled by this Utopia reveals the mental structures in which financial actors are embedded. It also allows us to plot possible pathways for the reconstruction of the financial system, including local currencies, and the renewal of financial knowledge.

The making of urban financialization? An exploration of brazilian urban partnership operations with building certificates

This paper provides two contributions to the research on urban planning and the financialization of land use. Instead of stressing the consequences of finance on others, it prioritizes the analysis of the social-technical constitution of finance itself within urban planning, and does so in an emerging country setting, which is still relatively understudied in the existing literature. We analyse a specific Brazilian planning instrument, i.e., the sale of securitized building certificates (CEPACs) in large urban (re)development projects (UDPs), as a potential constituent space of urban financialization. The paper explores how planners, financial consultants, contractors and builders/developers effectively shape the contradictory financial and physical design and implementation of UDPs with CEPACs. Although the initial evidence shows that there are still clear limits to the penetration of financial logics into land use planning, continuing regulatory rollout and the increasing activism of foreign investors suggest the instrument’s open-ended trajectory, with a potentially more significant role for financial actors in constituting urban financialization through CEPACs.

From “Communautaire Spirit” to the “Ghosts of Maastricht”: European Integration and the Rise of Financialization

The present article addresses the relationship between the process of economic integration of the European Union and the rise of financialization in the continental economy. For that purpose, it analyzes the policies applied and the main macroeconomic indicators of a selected group of countries. The conditions imposed by the Treaty of Maastricht and the Convergence Criteria show a strong neoliberal mark, in alignment with those of the Washington Consensus Agenda, promoting the development of the financial activities and favoring the interest of the financial actors to the detriment of other sectors, such as the industrial and the salaried and middle-income groups. The article also emphasizes the importance of the structural reforms applied, by arguing that it would have been impossible to meet the objectives of the Economic and Monetary Union without a substantial transformation of the European economy. Additionally, the article introduces a novel concept called “the paradox of financialization.” It refers to the increasing dependence of EU economies on the financial sector for economic growth, while the only way for the financial sector to expand is by engaging in riskier and more speculative practices. Consequently, this situation makes economic growth more unstable and cycles more volatile.

Divesting from Climate Change: The Road to Influence

Is fossil fuels divestment likely to achieve its aims? This article evaluates the rationales for divestment in terms of their capacity to give the campaign influence. It focuses on the direct effects of divestment on financial actors because divestment is a specific means of exerting influence outside of conventional political channels. In seeking to end fossil fuel industries in order to halt climate change, the campaign deploys a variety of arguments to win support and wield influence, namely, the legality of divestment and, indeed, the emerging duty to divest; investors’ moral responsibility to avoid complicity in the fossil fuel economy; investors’ moral responsibility to use their leverage against climate polluters; and the power of financial sanctions to create a business case for abandoning fossil fuels. Although in combination they may be effective, each of these asserted rationales has some limitations that may diminish the influence of the divestment movement. Moreover, the movement does not engage sufficiently with the systemic qualities of finance capitalism that must also be reckoned with in order to address broader patterns of environmental unsustainability. Although the divestment movement aspires to ultimately change government policies on climate change, it may achieve greater influence by also seeking better government regulation of the financial economy.

Crowd-patronage—Intermediaries, geographies and relationships in patronage networks

This article introduces a new mode of patronage of the arts: crowd-patronage. In so doing the article illustrates the plural roles of intermediaries in patronage networks which go beyond Bourdieuian cultural intermediaries to include regulatory and financial actors. A brief history of patronage is presented which outlines different modes and eras of patronage for the arts since the 12th century. Particular attention is paid to the geographies of patronage networks, the mobility of artists, the plurality of roles played by intermediaries and the relations between patrons and artists. These themes then structure the analysis of crowd-patronage through a case study of the patronage platform Patreon in the remainder of the paper. Crowd-patronage is distinctive because of the scale and geographical scope of patronage networks, its focus on funding practice rather than outputs, a shift in the power relationships between patron and artist, and processes of re-intermediation.

Emotional economic man: Calculation and anxiety in fund management

Dominant theorisations of investment decision making remain firmly wedded to the notion of economic rationality, either as a postulate of how financial actors actually behave or as a normative ideal to which financial actors should strive. However, such frameworks have been developed largely without engaging financial market participants themselves. Based on 51 in-depth interviews with fund managers in various global financial centres, this article highlights a number of features of investment decision making that mainstream finance and behavioural approaches both fail adequately to describe. Drawing on psychoanalytic theory, it is shown how the inherent uncertainty of the investment process engenders a state of endemic anxiety among fund managers. This anxiety is managed via a range of mental defences, both conscious and unconscious. The importance fund managers place on meeting and putting trust in company management to ‘perform’ for them can equally be viewed as a means of alleviating anxiety rather than having any direct economic purpose. This article, furthermore, brings to light the crucial role that calculative techniques play in dealing with anxiety. Rather than constituting a means of restoring rationality or correcting cognitive biases, calculation can actually reinforce ego defences while simultaneously perpetuating the myth of homo economicus. Fund managers can be characterised as ‘doing’ but ‘not doing’ and ‘knowing’ but ‘choosing not to know’ and have to manage not only their clients' funds, but their own personal anxiety as well.

Timing practices and material markers in coordinating collective market patterns

This paper considers the practices of coordination in financial markets that do not rely on a common market device (e.g., trading platform or calculative tool) to organize trading between buyers and sellers. Our case focuses on the coordination of the pricing cycle within the reinsurance sector. Building on social studies of finance, we adopt a practice-theoretical perspective. Our study goes beyond existing work in showing the importance, and inherently strategic nature, of timing practices in financial markets. Specifically, our ethnographic study of coordination in the reinsurance market shows the recursive interplay between four types of timing practices – delaying, readying, rushing and settling – and the various material artifacts that reinsurers (i.e., sellers) create in shaping the unfolding market pricing cycle. We show how market actors shape the temporal flow of the markets by strategically manipulating time, to both position themselves favorably on individual deals and to collectively push the pricing cycle up. In theorizing the interplay between timing practices and material markers in financial markets, our study advance theory on financial market coordination in three ways. First, we bring to the foreground the strategic nature of financial actors’ sociomaterial practices and show how such practices can impact on broader market outcomes, in our case the market cycle. Second, our exploration of material markers extends concepts of materiality in financial markets beyond the technological affordance of a common trading platform or pricing tool. Third, we further our understanding of the complex relationships between the temporality of financial market microstructures and their coordination practices.

Emergent new finance: hedge funds and private equity funds in East Asia

ABSTRACTHedge funds and private equity funds are two of the most discussed features of contemporary global finance. This article explores the extent to which these new financial forms have arisen outside of the US and a small number of other advanced financial markets. There has been greater experimentation with global finance in emerging markets than is often acknowledged and domestic resistance to Anglo-Saxon business processes has not derailed the spread of new finance across the Asian region. The rise of these new financial industries, with the notable exception of Japan, would have been impossible without the commitment of one key domestic actor. Asian institutional investors, especially pension funds, have served as crucial financiers to hedge funds and private equity groups. The article concludes with caution concerning whether these new financial actors are set to capture significant global market share.

Green Keynesianism: Bringing the Entrepreneurial State Back in(to Question)?

Since the global financial crisis of 2007/8, proliferating calls for a Keynesian Green New Deal have cast the publicly (and environmentally) minded state as a necessary driver of technological innovation and social transformation, while, vice versa, innovation has moved to political centre-stage. The history and genesis of this particular Green Keynesian paradigm illustrate that some of its most high-profile proponents selectively and problematically frame twentieth-century Keynesianism and the ‘public good’. It is important to examine critically the calls for an ‘entrepreneurial state’ in which Green Keynesian ideas are mobilized in support of an agenda for continued and accelerated development of commercially focused, privately developed green technologies. The entrepreneurial state represents a neoliberal re-appropriation of Green Keynesianism, where dominant financial actors (in Silicon Valley, as opposed to on Wall Street) are tapped as the visionaries who can and should set our collective innovation agenda. Although there is a need for large-scale, coordinated techno-social efforts to address climate change, supporting ‘green’ innovation cannot simply be framed as maximizing ‘innovation’ while taking the ‘state’ for granted. Instead, it must entail a careful assessment of the specific trajectories of innovation being enabled and the underlying socio-natures that they maintain and promote. Science and technology studies (STS)-informed analysis allows, and compels, asking how socio-technological innovation and their constitutive power relations are crucially interrelated, making the reshaping of the state—still the primary institution and system of social relations of collective governance—a core but neglected political, technological and ecological project of our time, with a key role for STS.

The World Bank as a political, intellectual, and financial actor (1944-1994)

El artículo analiza la historia del Banco Mundial durante sus primeros cincuentaaños. Se argumenta que, desde el principio, el Banco utiliza el crédito como palancapara ampliar su influencia e institucionalizar ideas económicas, visiones del mundo yprescripciones de política en sus clientes. Detrás de su aspecto técnico, el Banco siempreha funcionado, aunque de diferentes formas, en la intersección de los campos político,económico e intelectual a escala internacional, en función de su condición singular deprestamista, actor político y promotor de ideas y recetas acerca de lo que se debe haceren cuestiones de desarrollo capitalista, en clave anglosajona. Basado en una amplia ydiversa literatura y fuentes de la institución internacional, el texto aborda la cuestiónteniendo en cuenta la política de Estados Unidos hacia la institución, los cambios en laeconomía política y la gestión de decisiones internacionales claves de la entidad.

Public and Fiscality: Facts and Unknowns

Abstract Taxes on physical and juridical persons constitute a permanent source of income for the authorities, income that is used to cover public expenses. As the need for public financial resources is growing permanently, a decrease in the tax levels can cause confusion or even public controversy. However, changes brought in the current fiscal legislation have brought a series of decreases (theoretically substantial) of the fiscal obligations owed by the tax payers. Thus, it is natural to try and identify the potential benefits or consequences of the fiscal relaxation that has occurred. Moreover, it can be established if there is a possibility to replace eventual losses of resources from the targeted taxpayers with tax charges that affect other financial actors.

Financing renewable energy: Who is financing what and why it matters

Successful financing of innovation in renewable energy (RE) requires a better understanding of the relationship between different types of finance and their willingness to invest in RE. We study the ‘direction’ of innovation that financial actors create. Focusing on the deployment phase of innovation, we use Bloomberg New Energy Finance (BNEF) data to construct a global dataset of RE asset finance flows from 2004 to 2014. We analyze the asset portfolios of different RE technologies financed by different financial actors according to their size, skew and level of risk. We use entropy-based indices to measure skew, and construct a heuristic index of risk that varies with the technology, time, and country of investment to measure risk. We start by comparing the behavior of private and public types of finance and then disaggregate further along 11 different financial actors (e.g. private banks, public banks, and utilities) and 11 types of RE technologies that are invested in (e.g. different kinds of power generation from solar radiation, wind or biomass). Financial actors vary considerably in the composition of their investment portfolio, creating directions towards particular technologies. Public financial actors invest in portfolios with higher risk technologies, also creating a direction; they also increased their share in total investment dramatically over time. We use these preliminary results to formulate new research questions about how finance affects the directionality of innovation, and the implications for RE policies.

An institutional perspective on governance, power, and politics of financial risk

AbstractAvoidance of risk and increasing returns are the two main motivators in finance. Returns are better understood and perhaps more easily regulated than financial risk, which is a complex and slippery concept. Financial risk may be best conceived of as a complementary good, but the nature of this good varies as the size of the investment position scales up. That is, the effects of financial risk may be conceived of as a private good for a small financial actor, but becomes a club good, then a common pool, and occasionally a public good as the impact of the investment position's financial risk spreads to affect more of society. Examining banking history shows us that banks and bankers have offset risk while retaining returns through structuring financial products and investment vehicles as club goods, thereby enabling financial actors to jointly benefit from ownership while harming those outside the club walls. Not surprisingly, this capacity to push risk outside club walls has grown commensurate with the political influence of banks and bankers. Laying out governance strategies and concepts, I suggest that in some circumstances pervasive club good structures in finance may be employed to gather regulation-enhancing information, to better understand the networked nature of financial risk and to craft self-governance structures.

Global finance as a politicized habitat

AbstractPredominant models of financial regulation based on representative agents—in both the public interest and public choice traditions—assume that competitive pressures in financial markets undermine prudential behavior by firms in the absence of regulation. One empirical expectation of these models is behavioral: firms should adjust their risk-taking behaviors in response to the regulatory environment they face but should not over-comply with regulations. That is, the central tendency of bank behaviors should hew closely to regulatory minima and the variance should be small. I first demonstrate that this expectation is not borne out by the empirical record and then advance a theoretical argument that does not rely on a representative agent model. I argue that firms face a range of incentives from markets and governments that condition their risk-taking behaviors, and firms choose a “preferred habitat” within a market structure. Some of these incentives are towards greater risk-taking, while others are in the direction of greater prudence. This framework provides opportunities for examining financial market actors in a realistic context, and offers ways to unify micro-level and structural analyses of the political economy of global finance.