FINACIALISATION OF NON-FINANCIAL CORPORATIONS AND EFFECTIVE DEMAND: AN ANALYSIS FRAMEWORK

Some recent contributions to economic literature have highlighted the role of corporate savings decisions by big corporations in devoting their profits to direct investment in capital goods, showing how this role is affected by the features of corporate governance and the forms of competition, but also by the possibilities of holding liquid financial assets bearing high returns. However, at the macroeconomic level, some of these analyses show a fallacy of composition in explaining the effects of financialisation on real aggregate investment. The paper proposes an analytical framework in which the growing financialisation of big corporations, interacting with financial globalization, can play a major role in timing the rhythms of real investment in a part of the world economic system. Moreover, the paper shows how the liquidity degree of the assets can also be a very important determinant in portfolio choices by corporations, in close connection with business fluctuations.