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Global Finance: changing practices, actors, and geographies

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  • Fichtner, Jan

    (University of Amsterdam)

  • Petry, Johannes

Abstract

Global finance can be seen as a complex international network of portfolio investments, loans and financial transactions shaped by various private but also by public actors. The vast profit-seeking activities of private financial actors influence capital flows, market stability, and the allocation of financial resources have an impact on corporations, markets, and governments worldwide. In other words, global finance is not a ‘neutral’ tool for price-discovery or a ‘pass-through’ segment that merely provides capital to its most efficient use in the real economy – global finance is much more than that, it is about (re)shaping politico-economic power relations in the contemporary international political economy. Before the global financial crisis of 2007-2008, private commercial and investment banks arguably constituted the core of global finance and exerted an outsized influence. However, the crisis initiated a shift in the power distribution and actors’ constellations within global finance. This new era was arguably marked by a relative decline of big banking groups – and the concomitant rise of large asset management firms (e.g., BlackRock) and other emerging influential actors such as index providers (e.g., MSCI). In parallel, the traditional center of gravity of global finance, which revolved around the axis between New York and London, was complemented and also partly challenged by the ascent of new actors such as sovereign wealth funds and financial markets from the Global South, above all China. These new actors often follow a somewhat different logic than the frequently short-term oriented and primarily profit-driven financial market actors from the Anglo-American core, since they are often permeated by government interests and consequently aimed at incorporating long-term strategic goals.

Suggested Citation

  • Fichtner, Jan & Petry, Johannes, 2024. "Global Finance: changing practices, actors, and geographies," SocArXiv asx7t, Center for Open Science.
  • Handle: RePEc:osf:socarx:asx7t
    DOI: 10.31219/osf.io/asx7t
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    References listed on IDEAS

    as
    1. Milan Babic & Javier Garcia-Bernardo & Eelke M. Heemskerk, 2020. "The rise of transnational state capital: state-led foreign investment in the 21st century," Review of International Political Economy, Taylor & Francis Journals, vol. 27(3), pages 433-475, May.
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    5. Johannes Petry & Jan Fichtner & Eelke Heemskerk, 2021. "Steering capital: the growing private authority of index providers in the age of passive asset management," Review of International Political Economy, Taylor & Francis Journals, vol. 28(1), pages 152-176, January.
    6. Fichtner, Jan & Heemskerk, Eelke M. & Garcia-Bernardo, Javier, 2017. "Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk†," Business and Politics, Cambridge University Press, vol. 19(2), pages 298-326, June.
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