Identifying the 'financialization' of the nonfinancial corporation in the US economy: A decomposition of firm-level balance sheets

摘要

This paper develops the concept of the financialization of the nonfinancial corporation (NFC) by laying out the key stylized facts describing NFC financial behavior between 1950 and 2014 via a detailed decomposition of firm-level balance sheets. In the existing literature, the concept of the financialization of the nonfinancial corporation remains ambiguous; as such, clarification of the trends that have occurred in NFC financial behavior is an important prerequisite for analyses of why NFC behavior has changed and with what consequences. By systematically delineating the evidence for the financialization of NFCs, this paper contributes to the literature by establishing precisely how NFC financial behavior has changed in the post-1980 U.S. economy. The growing financialization of nonfinancial corporations is summarized by an increased share of financial assets in NFC portfolios, increasing indebtedness and equity repurchases among large firms, and deleveraging among smaller firms. The paper concludes by introducing the behavioral insights gained by approaching these stylized facts from a conceptual standpoint emphasizing the interdependence of portfolio and financing decisions and, thus, the links between the changes in financial behavior across NFC balance sheets.