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- Functional income distriibution in a small European country: the role of financialisation and other determinantsPublication . Barradas, Ricardo; Lagoa, SérgioThis paper provides an empirical analysis of the relationship between the labour income share and financialisation, as well as other related variables in Portugal from 1978 to 2012. We estimate an equation for the labour share that includes standard variables (technological progress, globalisation, education and business cycle) and variables to capture the effect of financialisation. We formulate the hypothesis that the financialisation process may lead to a rise in the inequality of functional income distribution through three channels: the change in the sectoral composition of the economy (due to both the increase in the weight of financial activity and the decrease in government activity), the diffusion of shareholder value governance practices and the weakening of trade unions. Our results show that the financialisation process has an indirect long-term effect on the labour share through its impact on government activity and trade union density. The paper also finds evidence supporting the traditional explanations for functional income distribution, namely globalisation, education and business cycle.
- Financialization and Portuguese real investment: a supportive or disruptive relationship?Publication . Barradas, Ricardo; Lagoa, SérgioThe article makes an empirical analysis of the relationship between financialization and real investment by Portuguese nonfinancial corporations from 1979 to 2013. In theory, while financialization leads to a rise in financial investments by nonfinancial corporations and thus deviates funds from real investment, it also intensifies the pressure for financial payments and therefore restricts the funds available for real investment. We estimate an aggregate investment function including control variables (profitability, debt, cost of capital and output growth) and two measures of financialization (financial receipts and financial payments). The study concludes that there is a long-term investment equation, and finds evidence that the process of financialization has hampered real investment largely as a result of financial payments. The article also finds that profitability and debt are both detrimental to real investment.
- Functional income distribution in portugal: the role of financialisation and other related determinantsPublication . Barradas, Ricardo; Lagoa, SérgioThis paper provides an empirical analysis of the relationship between the labour income share and financialisation, as well as other related variables in Portugal from 1978 to 2012. We estimate an equation for the labour share that includes standard variables (technological progress, globalisation, education and business cycle) and variables to capture the effect of financialisation. We formulate the hypothesis that the financialisation process may lead to a rise in the inequality of functional income distribution through three channels: the change in the sectoral composition of the economy (due to both the increase in the weight of financial activity and the decrease in government activity), the diffusion of shareholder value governance practices and the weakening of trade unions. Our results show that the financialisation process has an indirect long-term effect on the labour share through its impact on government activity and trade union density. The paper also finds evidence supporting the traditional explanations for functional income distribution, namely globalisation, education and business cycle.
- Financialization in the European Periphery and the Sovereign Debt Crisis: The Portuguese CasePublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, Emanuel; Mamede, RicardoThe financial sector has acquired great prominence in most developed economies. Some authors argue that the growth of finance is at the root of the financial and economic difficulties of the past decade. This article aims to analyze this claim by looking at financialization in the European periphery, focusing on the Portuguese case. The emergence of this phenomenon is contextualized from a historical, economic and international perspective. Based on the analysis of several indicators, the article concludes that the Portuguese economy exhibits symptoms of financialization that are typically found in Southern European countries and that these differ significantly from the patterns characterizing financialization processes in more advanced economies. The article discusses how the increasing importance of financial actors and motives in the Portuguese economy played a decisive role in the emergence of the crisis.
- A Sustentabilidade do Sistema de Pensões em PortugalPublication . Barradas, Ricardo; Lagoa, SérgioO objetivo principal deste trabalho é analisar as características atuais do sistema de pensões em Portugal, as principais reformas efetuadas e as perspetivas de evolução, procurando identificar propostas de melhoria. Entre 1995 e 2014, o peso da despesa com pensões na economia registou em Portugal um dos maiores aumentos da área do euro, e em 2014 situou-se entre os mais elevados. Em face desta evolução, foram realizadas reformas importantes, nomeadamente a partir de 2002, que melhoraram a sustentabilidade financeira do sistema de pensões e o colocaram, genericamente, em linha com os melhores sistemas da OCDE em termos da promoção da eficiência microeconómica e da existência de um fator de sustentabilidade demográfica, tendo sido possível manter uma capacidade de substituir rendimento superior à média europeia. Apesar de algumas melhorias no combate à pobreza, este continua a ser um dos elementos onde a margem de melhoria ainda é significativa. Em termos financeiros, as reformas realizadas permitem que as perspetivas a longo prazo (2060) não sejam de agravamento do défice financeiro, apesar de este persistir, à semelhança do que ocorre na UE. Assim, as necessidades de melhoria do sistema continuam presentes, sendo apresentadas algumas propostas ao longo do trabalho.
- Financialisation in the european periphery and the sovereign debt crisis: the portuguese casePublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, Emanuel; Mamede, RicardoThe financial sector has acquired great prominence in most developed economies. However, some authors argue that the growth of finance is at the root of the current financial and economic difficulties. This paper aims to analyse this claim by looking at financialisation in the European periphery, focusing on the Portuguese case. The emergence of this phenomenon is contextualised from a historical, economic and international perspective. Based on the analysis of several indicators, the paper concludes that the Portuguese economy exhibits symptoms of financialisation, and that this has not only revealed the structural weaknesses of the Portuguese economy but also played an important role in the emergence of the recent Portuguese sovereign debt crisis.
- Risk management, the subprime crisis and financialisation: the role of risk management in the generation and transmission of the subprime crisisPublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, EmanuelOver time the financial sector has gained greater relevance in the economy, a phenomenon that some call financialisation. Contrary to the mainstream view, financialisation literature emphasises that risk management by financial corporations will not be socially efficient in a context of deregulated markets and will ultimately lead to an increase of aggregate risk and crises. To assess the validity of such claim, in this paper we review the literature on risk management during the Subprime crisis. These failures fall into three categories: technique and methodology, corporate governance and strategy, and regulation and external factors. These failures can be interpreted in the light of the financialisation perspective, which is therefore a valuable approach when addressing regulatory changes in the financial system.
- The Non-For-Profit Banks in Portugal: Specificities, Social Role and EvolutionPublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, EmanuelThis paper establishes the main differences between standard commercial banks and the two non-for-profit banks operating in Portugal (Caixa Agrícola – CA - and Caixa Económica Montepio Geral – CE-MG). In particular, we find differences in the way funds are raised, governance criteria, tax regime, application of profits and attitude towards profit. However, CA is more similar to a typical co-operative/mutual bank than CE-MG. Both banks have modernized and transformed into modern financial groups offering a wide variety of financial products similar to any commercial bank. However, this was not enough to avoid an erosion of their market position in terms of credit and deposits. The 2008 financial crisis’ impact on the profitability of CA was similar to the impact on the industry average, whereas on CE-MG the impact was milder.
- The Long Boom and the Early Bust: The Portuguese Economy in the Era of FinancialisationPublication . Barradas, Ricardo; Mamede, Ricardo; Lagoa, Sérgio; Leão, EmanuelThis chapter expands the authors’ previous work on the Portuguese financial system’s evolutions in the past three decades. In that work they extensively documented the various signs of financialisation in the Portuguese economy. Now the authors focus on the effects of financialisation in Portugal on the long-run macroeconomic development and on the financial and economic crises that hit the country in recent years. The chapter is divided in four main sections. Section 11.2 discuss the main features of the development of the Portuguese economy since the early 1980s. Section 11.3 builds an analysis by looking in greater detail at four different channels through which financialisation affects the evolution do the Portuguese economy: income distribution, investment in capital stock, private consumption and the current account. Section 11.4 addresses the crisis and section 11.5 presents the conclusions.
- Fontes de financiamento e soluções de reforma do sistema de pensões portuguêsPublication . Barradas, Ricardo; Lagoa, SérgioOs sistemas de pensões na Europa enfrentam um conjunto de desafios que colocam em risco a sua sustentabilidade financeira e o seu papel no combate à pobreza e na substituição de rendimento na velhice. Assumindo que o atual modelo de repartição de benefício definido se mantém, o presente trabalho tem como objetivo primordial avaliar as diferentes formas de equilibrar as contas do sistema de pensões, designadamente as alternativas para aumentar as suas receitas. Este objetivo será atingido com recurso a uma revisão sistemática da literatura e à análise de dados secundários. São elencadas as opções mais razoáveis para elevar o financiamento da Segurança Social, mas tendo como pano de fundo que o problema das pensões só pode ser resolvido com uma combinação de políticas sociais e económicas que visem o aumento do crescimento da economia, do emprego e da natalidade.