Financial chains in financialized economies: the role of central banks

Keywords: Finance, financialisation, financial chains, economy, central banks
Session Type: Virtual Poster Abstract
Day: Monday
Session Start / End Time: 2/28/2022 11:20 AM (Eastern Time (US & Canada)) - 2/28/2022 12:40 PM (Eastern Time (US & Canada))
Room: Virtual 45

Abstract

This poster aims to provide a simplified graphic model of a circulation of finance in a financialized economy. It first reviews three existing models of financial flows (mainstream, post-Keynesian and Marxist models) highlighting their strengths and weaknesses. Moving beyond these models, the poster then outlines a model based on the concept of ‘financial chains’. This model captures the interconnectedness (via financial chains) of main economic players – firms, banks, households, financial markets, and the state – and their relative position in the system. In addition to this, the model highlights the pivotal role of the central bank in sustaining the financialized economy (an aspect often overlooked by the financialisation literature). This role has been further highlighted by the extraordinary monetary operations that central banks around the world undertook during the Covid-19 pandemic. Spatial manifestations of these monetary interventions remain unclear and require urgent attention of economic and financial geographers.