Financialization of Non-financial Industries, United States, 1980-2006

Abstract

Non-financial firms have become substantially dependent on financial revenues. However, the timing and intensity of financialization vary by industry. We investigate variation in the level of financialization among different non-financial industries in the United States from 1980 to 2006. We first illustrate how unique incidents and regulatory changes influenced different industries’ financialization trajectories. We also conduct a statistical analysis to examine three types of industry-level determinants: profitability, uncertainty, and factor intensity. We find that these determinants have high explanatory power regarding interindustry variation in financialization. An industry-level analysis allows us to better understand the role of historical, institutional, and industrial factors in the financialization process which have been overlooked in structure-oriented research.