This paper estimates the effects of financialisation on physical investment in the UK using panel data based on balance sheets of publicly listed non-financial com-panies supplied by Worldscope for the period from 1985 until 2013. We find robust evidence of an adverse effect of not only financial pay- ments (interests and dividends) but also financial incomes on the rate of accumulation. The negative impacts of financial incomes from interest and dividends are particularly strong for the pre-crisis period. Our findings support the ‘financialisation thesis’ that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical invest- ment and hence to stagnant or fragile growth, as well as to long- term concerns for productivity.
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