Financial accumulation in non-financial corporations: a firm-level assessment for the OECD

Abstract This article analyzes the determinants of financial accumulation in non-financial corporations (NFCs) at the firm level for OECD economies from 1994 to 2021. We estimate firm-level regression models contrasting hypotheses traditionally found in the literature on financialization (that firms turn to financial incomes in response to weakened profitability or shareholder-value orientation) with more recent alternative explanations (that point toward other independent processes such as monetary policy rates or corporate internationalization). Our results show that changes in monetary policy and stock-market capitalization are more relevant drivers of financial income accumulation overall, whereas the traditional explanations appear to be significant only for firms in the USA, particularly for highly financialized firms. Additionally, corporate internationalization also appears to be strongly related to financial incomes in NFCs. These results, thus, support recent calls for a revision of the traditional narrative regarding financial accumulation in advanced economies and its relation to other general economic processes.