The Dark Side of the Global Securities Markets Consolidation

• In Event: 355 - Section on Economic Sociology Roundtable Session (one-hour).
  In Refereed Roundtable: Table 13. Varieties of Moral Markets

Abstract

In this paper, I study the global consolidation of the securities market industry and its consequences for the corporate world and the national economies. While consolidation strategies are mainly advocated by neoliberalism supporters and mainstream economists, sociologists believe that integration and consolidation, especially in financial markets, will have more substantial negative outcomes and undesired side effects. Sociologists believe that too much integration and interconnectedness may create substantial systemic risk and may lead governments to lose their sovereignty and power over their economies. Advocates of consolidation consider interconnectedness as a fundamental necessity, ignoring the potential negative outcomes. To investigate the claims of neoliberal advocates, I present several testable propositions regarding the potential negative consequences of securities markets consolidation such as inequality, instability, and systemic risk. My propositions suggest that the advocacy of financial liberalization and market integration by advanced economies and international organizations may result in increased limitations for firms in developing countries that seek to raise capital, higher likelihood of instability and crisis especially in emerging economies, as well as increase in the dependence of the developing economies on the advanced ones.

Author

• Pooya Tavakoly, Univerity of Lugano