Hedge funds: agents of change for financialization

Abstract

Purpose – The purpose of this paper is to examine in which ways hedge funds contribute to financialization. Design/methodology/approach – Two already identified conduits through which financialization operates are applied to hedge funds. Findings – The paper finds that hedge funds drive the phenomenon of financialization in two major ways, i.e. the financialization of corporations, and the financialization of markets. Hence, hedge funds can be conceived as agents of change for financialization. Research limitations/implications – There are indications that hedge funds possess disciplinary power. Future research should address this pivotal point, even though such power will be difficult to prove empirically. Social implications – Hedge funds have been found to potentially increase market volatility. In times of crisis, stricter regulation of these investors that take excessive risks seems prudent. Originality/value – Through linking “hedge funds” with “financialization” this paper closes a research gap. In addition, the so far rather structural debate about financialization benefits from the actor-centered approach of this paper.

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