Influence of Financialization on Real Investment in the Swedish Non-Financial Sector: An Empirical Analysis

Abstract

This study estimates the impact of financialization on investment in the non-financial sector in Sweden, using data from the Thomson Reuters database for the period 2000–2019. Financial income and financial payments are used as proxies for financialization. We find robust evidence of a negative effect of increasing financial income on the physical investment of Swedish non-financial companies. Paradoxically, no significant evidence is found for a negative influence of financial payments on physical investment. This may be related to factors such as the relatively low level of such payments, the general tendency of Swedish firms to buy securities rather than issue financial instruments, and the overall “financial health” of these firms.

JEL: C23, D22, E22, G30