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This chapter provides a non-technical historical overview of the role of money and financial transactions in society. It starts with the Sumerians and then considers: biblical times, medieval Europe, and the financial developments that occurred in the Netherlands during the 16th and 17th centuries. The final part of the chapter considers both the p...
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... This timing is viewed as the start of era of the continuity of financialization processes that has already began in earlier decades. Before the 1980s, examples of previous processes of financialization are the growth in the volume of financial transactions, financial sector deregulations, securitizations (Levy, 2016). ...
We empirically investigate the effects of financialization on economic growth in South Africa. The country experienced increases in the share of the financial sector since the democratic dispensation. This country is also one of the few developing countries with a large financial market. The sample period includes a long-run horizon from 1994 to 2021. The study applies quantile regression methodology which we use to explain the effects of financialization at different levels of economic growth. We estimate the effects of financialization at the 25th, 50th, 75th percentile of economic growth. The key measure of financialization is the finance gross value added and the measure of economic growth is the gross domestic product. We find that financialization has a significantly high and positive effect only at all the levels of economic growth. From the different percentiles, financialization contributes more to higher levels of economic growth.
... While digitalization constituted a significant advancement, it did so in the context of a legacy system. The exorbitant expenses of the traditional system prompted other innovations, which we now refer to as Fintech ( Levy, 2016); (Mallick, 2021). ...
We are on the precipice of a new form of finance that will use a range of technologies to
change the way we use and manage one of our most fundamental tools: money. If we can email
virtually anybody in the world, why cannot we send them money just as easily, or offer them a
loan? These questions are the foundations of Decentralized Finance’s (DeFi) activities and
objectives. In short, DeFi refers to an ecosystem of financial applications built on top of a
blockchain. Its common goal is to develop and operate in a decentralized way, without
intermediaries such as banks, payment service providers or investment funds by providing all
types of financial services on top of a transparent and trustless blockchain network.
Withdrawing cash from an ATM, applying for a mortgage by visiting a bank branch, or
shopping in a department store are things of the past. Presently, for many, conducting financial
transactions of any kind is a purely an online experience, escalated over the past two years by
the COVID-19 pandemic. Increasingly, the future of money exists in the Ether, via phones and
laptops. Cryptocurrencies and other faster, more powerful financial technologies are
transforming our concept of money and challenging the financial institutions that currently
manage it. The year 2021 was a transformative year for finance, and 2022 is shaping up to bring
more change. This book discusses four categories that are diving into the future of money:
blockchain, Cryptocureencies, DeFi and fintech innovations.
Finance is an inseparable part of modern civilization. Although there are some inefficiencies in the modern financial system, it is far better than that of the past. Modern financial system has not only adopted a paperless workflow, but it has also drifted toward a decentralized ecosystem where the entire control is not held with a central authority who used to take all the imperative decisions.When looking back at the conventional era, the earlier days when the term finance was not even coined and there was no official currency, exchanges used to take place with the help of available commodities. People used to purchase the necessary items in exchange for grains and animals. However, the notion of currency was soon established by launching coins. This gradually moved forward with the establishment of financial systems such as banks. These financial institutions were centralized and used a monopoly to operate the infrastructure. Centralized financial systems ruled the world with numerous technology advancements until, recently, there is an unprecedented discussion on decentralized marketplace.Decentralized finance is an ecosystem that supports no use of intermediaries in a transaction. It comprises two or more users who want to execute a financial transaction. It is something people had not even imagined in the past. This chapter sheds light on some important foundational building blocks of decentralized finance. It digs into the roots of origin of decentralized finance and key problems faced with centralized financial systems. It also introduces bitcoins and cryptocurrencies to set up the base for upcoming chapters.
