Influence of financialization on the business activity of non-financial enterprises in Poland
DOI:
https://doi.org/10.12775/EiP.2023.041Keywords
financialization, financial statements analysis, small and medium-sized enterprises, large enterprises, sectoral analysisAbstract
Motivation: Financialization is connected with the phenomenon of dominance of the financial sphere in relation to the real sphere. Financialization, when applied to non-financial entities, means the increase of importance of financial motives in the decision-making processes of enterprises. Changes result from transformations of the system of economic incentives and development patterns, both in the economy and among economic entities, which are focused on fast earning. Enterprises for that purpose, they use leverage and financial instruments to generate profit, limiting the operational and investment activity.
Aim: The aim of this paper is to examine if the processes of financialization have affected the activities of non-financial enterprises operating in Poland based on a multifaceted analysis of the financialization of enterprises: from the point of view of investment activities (assets), sources of external financing (liabilities), income and management. Moreover, an attempt was made to answer the question if these processes apply equally to particular industries and enterprises according to their size.
Results: The conducted research showed that non-financial enterprises operating in Poland do not show signs of financialization of their activities. There is a noticeable upward trend in active and passive financial instruments of the balance sheet total. However, it does not translate into an increase in financial income. Research related to factors affecting ROE as a measure of shareholder value assessment, showed that it is determined by operating performance. In addition, the research showed that there were no statistically significant differences in the financialization of operations between large companies and the SME sector. With regard to sectors, the research indicated that there were sectors that differed from the others. In terms of the degree of financialization of assets, liabilities and income, it is sector L — “Real estate activities”.
References
Akkemik, K.A., & Ozen, S. (2014). Macroeconomic and institutional determinants of financialisation of non-financial firms: case study of Turkey. Socio-Economic Review, 12(1), 71–98. https://doi.org/10.1093/ser/mwt006.
Alvarez, I. (2015). Financialization, non-financial corporations and income inequality: the case of France. Socio-Economic Review, 13(3), 449–475. https://doi.org/10.1093/ser/mwv007.
Baud, C., & Durand, C. (2012). Financialization, globalization and the making of profits by leading retailers. Socio-Economic Review, 10(2), 241–266. https://doi.org/10.1093/ser/mwr016.
Commission recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003).
Crotty, J. (2005). The neoliberal paradox: the impact of destructive product market competition and modern financial markets on nonfinancial corporation performance in the neoliberal era. In G.A. Epstein (Ed.), Financialization and the world economy (pp. 217–279). Edward Elgar Publishing.
Cupertino, S., Consolandi, C., & Vercelli, A. (2019). Corporate social performance, financialization, and real investment in us manufacturing firms. Sustainability, 11(7), 1836. https://doi.org/10.3390/su11071836.
Davis, L.E. (2013). Financialization and the nonfinancial corporation: an investigation of firm-level investment behavior in the U.S., 1971–2011. Economics Department Working Paper Series, 161, 1–25. https://doi.org/10.7275/4744897.
Davis, L.E. (2016). Identifying the “financialization” of the nonfinancial corporation in the US economy: a decomposition of firm-level balance sheets. Journal of Post Keynesian Economics, 39(1), 115–141. https://doi.org/10.1080/01603477.2015.1116370.
Davis, L.E. (2017). Financialization and investment: a survey of the empirical literature. Journal of Economic Surveys, 31(5), 1332–1358. https://doi.org/10.1111/joes.12242.
Dore, R.P. (2002). Collected writings of R.P. Dore (1st ed.). Routledge. https://doi.org/10.4324/9781315074573.
Dumenil, G., & Levy, D. (2004). Capital resurgent: roots of the neoliberal revolution. Harvard University Press.
Faust, M., & Kädler, J. (2018). Die Finanzialisierung von Unternehmen. Kölner Zeitschrift für Soziologie und Sozialpsychologie, 70(1), 167–194. https://doi.org/10.1007/s11577-018-0543-9.
Froud, J., Haslam, C., Johal, S., & Williams, K. (2000). Shareholder value and financialistaion: consultancy promises, management moves. Economy and Society, 29(1), 80–110. https://doi.org/10.1080/030851400360578.
Gołębiowski, G., & Szczepankowski, P. (2015). Finansyzacja gospodarki krajów Europy Środkowo-Wschodniej. Ruch Prawniczy, Ekonomiczny, Społeczny, 77(4), 197–215. https://doi.org/10.14746/rpeis.2015.77.4.16.
GUS. (2010–2021a). Instrumenty finansowe przedsiębiorstw niefinansowych. Retrived 25.01.2023 from http://stat.gov.pl/obszary-tematyczne/podmioty-gospodarcze-wyniki-finansowe/przedsiebiorstwa-niefinansowe/instrumenty-finansowe-przedsiebiorstw-niefinansowych,20,3.html.
GUS. (2021b). Wyniki finansowe przedsiębiorstw niefinansowych w 2021 roku. Retrived 10.06.2023 from https://stat.gov.pl/files/gfx/portalinformacyjny/pl/defaultaktualnosci/5502/12/46/1/wyniki_finansowe_przedsiebiorstw_niefinansowych_w_2021_r_2.pdf.
Hecht, J. (2014). Is net stock issuance relevant to capital formation: comparing heterodox models of firm-level capital expenditures across the advanced and largest developing economies. Cambridge Journal of Economics, 38(5), 1171–1206. https://doi.org/10.1093/cje/bet070.
Hein, E. (2015). Finance-dominated capitalism and re-distribution of income: a Kaleckian perspective. Cambridge Journal of Economics, 39(3), 907–934. https://doi.org/10.1093/cje/bet038.
Karwowski, E., & Stockhammer, E. (2017). Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies. Economic and Political Studies, 5(1), 60–86. https://doi.org/10.1080/20954816.2016.1274520.
Krippner, G.R. (2005). The financialization of the American economy. Socio-Economic Review, 3(2), 173–208. https://doi.org/10.1093/SER/mwi008.
Lapavitsas, C., & Powell, J. (2013). Financialisation varied: a comparative analysis of advanced economies. Cambridge Journal of Regions Economy and Society, 6(3), 359–379. https://doi.org/10.1093/cjres/rst019.
Marszałek, P. (2022). Finansyzacja w Polsce w latach 2010–2020: skala i problemy. In G. Kotliński (Ed.), Bankowość komercyjna i spółdzielcza w Polsce: refleksje po trzech dekadach transformacji. Szkice ku pamięci Doktora Ryszarda Mikołajczaka (pp. 36–54). Uniwersytet Ekonomiczny w Poznaniu. https://doi.org/10.18559/978-83-8211-152-1/2.
Milberg, W. (2008). Shifting sources and uses of profits: sustaining US financialization with global value chains. Economy and Society, 37(3), 420–451. https://doi.org/10.1080/03085140802172706.
NBP. (2020). Aktywność kredytowa sektora przedsiębiorstw niefinansowych w Polsce w okresie pandemii COVID 19: wybrane zagadnienia. Retrieved 12.06.2023 from https://nbp.pl/wp-content/uploads/2022/11/Aktywnosc-kredytowa-przedsiebiorstw-COVID19.pdf.
Nolke, A., & Perry, J. (2007). The power of transnational private governance: financialization and the IASB. Business and Politics, 9(3), 1–27. https://doi.org/10.2202/1469-3569.1185.
Onaran, O., Stockhammer, E., & Grafl, L. (2011).Financialisation, income distribution and aggregate demand in the USA. Cambridge Journal of Economics, 35(4), 637–666. https://doi.org/10.1093/cje/beq045.
Orhangazi, O. (2008). Financialisation and capital accumulation in the non-financial corporate sector: a theoretical and empirical investigation on the US economy: 1973–2003. Cambridge Journal of Economics, 32(6), 863–886. https://doi.org/10.1093/cje/ben009.
Palley, T.I. (2007). Financialization: what it is and why it matters. The Levy Economics Institute Working Paper, 525, 1–31.
Palley, T.I. (2021). Financialization revisited: the economics and political economy of the vampire squid economy. Review of Keynesian Economics, 9(4), 461–492. https://doi.org/10.4337/roke.2021.04.02.
Park, Ch., & Han, G. (2022). The financialization of non-financial firms: the case of South Korea, 1997–2015. Current Sociology, 70(7), 1085–1105. https://doi.org/10.1177/00113921211012734.
Rabinovich, J. (2019). The financialization of the non-financial corporation: a critique to the financial turn of accumulation hypothesis. Matroeconomica, 70(40), 738–775. https://doi.org/10.1111/meca.12251.
Rabinovich, J.(2017). The financialisation of the nonfinancial corporation: a critique to the financial rentieralization hypothesis. CEPN Working Papers, 2017–22, 1–36.
Ratajczak, M.(2012). Finansyzacja gospodarki. Ekonomista, 3, 28–301.
Riccetti, L., Russo, A., & Gallegati, M. (2016). Financialisation and crisis in an agent based macroeconomic model. Economic Modelling, 52, 162–172. https://doi.org/10.1016/j.econmod.2014.11.028.
Rydzewska, A. (2016).Contemporary nature of stock exchange in view of the process of demutualization. Oeconomia Copernicana, 7(1), 49–62. https://doi.org/10.12775/OeC.2016.004.
Seo, H.J., Kim, H.S., & Kim, Y.Ch. (2012). Financialization and the slowdown in Korean firms’ R&D investment. Asian Economic Papers, 11(3), 35–49. https://doi.org/10.1162/ASEP_a_00160.
Socha, B., & Urban, D. (2018). The financialization of companies listed on the Warsaw Stock Exchange: the sector analysis. Annales Universitatis Mariae Curie-Skłodowska: Sectio H, 52(4), 93–102. https://doi.org/10.17951/h.2018.52.4.93-102.
Socha, B., & Urban, D. (2019). Przejawy finansjalizacji spółek giełdowych w opinii menadżerów: wynik badań własnych. Annales Universitatis Mariae Curie-Skłodowska: Sectio H, 53(4), 141–152. https://doi.org/10.17951/h.2019.53.4.141-152.
Stockhammer, E. (2004). Financialisation and the slowdown of accumulation. Cambridge Journal of Economics, 28(5), 719–741. https://doi.org/10.1093/cje/beh032.
Sunanda, S., & Dasgupta, Z. (2018). Financialisation and corporate investments: the Indian case. Review of Keynesian Economics, 6(1), 96–113. https://doi.org/10.4337/roke.2018.01.06.
Szczepankowski, P. (2016). Finansyzacja przedsiębiorstw przemysłowych w Polsce. Kwartalnik Nauk o Przedsiębiorstwie, 1, 31–47.
Szczepankowski, P. (2017). Financialisation of the non-financial corporations and enterprise value migration: evidence from the polish stock market: 2000–2015. Studia i Prace WNEiZ US, 50(3), 155–172.
https://doi.org/10.18276/sip.2017.50/3-13.
Williams, K. (2000). From shareholder value to present-day capitalism. Economy and Society, 29(1), 1–12. https://doi.org/10.1080/030851400360532.
Yang, B., & Chen, F. (2023). The financialization of nonfinancial companies in China: a macroeconomic perspective. Finance Research Letters, 53, 103407. https://doi.org/10.1016/j.frl.2022.103407.
Zhu, J., Tang, Y., Wei, Y., Wang, S., & Chen, Y., (2023). Corporate financialization, financing constraints, and innovation efficiency: empirical evidence based on listed Chinese pharmaceutical companies. Frontiers in Public Health, 11, 1085148. https://doi.org/10.3389/fpubh.2023.1085148.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Alina Rydzewska
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Stats
Number of views and downloads: 392
Number of citations: 0
