Financialization: Diverting Income and Creating Income Inequality

Financialization refers to an economy driven more by the finance sector than the production sector. The consequence is increasing income inequality.
By Betty Armstrong

Financialization is a process in which financial markets grow in influence and size and achieve greater importance in a country's overall economy. The accepted definition is that financialization is the "growing scale and profitability of the finance sector at the expense of the rest of the economy and the shrinking regulation of its rules and returns." It is financial capitalism versus industrial capitalism or making money from money versus making money from trade in goods and services.

The impact of financialization is significant and affects business decisions concerning investments and where private and commercial investors place their money. Experts believe it drives economic inequality and increasing poverty rates, while slowing economic growth.

Disrupting th...

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