Description
We conduct a regional comparison that capture financialization of EEs at the international financial level (financial liberalisation, cross-border flows, and the presence of global value chains), the national level (the state, financial sector, Non-financial Corporations, and households) and at a city level (financial centres and house price inflation). We find that productive and financial international integration does not necessarily go hand in hand. We confirm the importance of the external dimension of financialisation for EEs; foreign liabilities are related to financialisation in all domestic sectors, private and public. At the city level also foreign liabilities are positively correlated with the global financial centre index.
Domestically, financialisation is positively correlated among the financial sector, non-financial corporations and households. Global financial centre is strongly linked with foreign measures but equally linked to all domestic private sectoral measures. House price inflation does not seem particularly important for EEs financialisation. Our findings suggest that financialisation should be understood as a variegated process. However, one commonality among EEs is the importance of the external dimension. This is a result that is notably different from the situation in rich countries and therefore constitutes a distinct characteristic of financialization in the global South.
