Technical and socio-economic determinants of financial institutions’ modern transformation in the global economy

Abstract

The trends of financial institutions and in particular the stock markets transformation is investigated in the context of technological and socio-economic processes that shape today's global economy. Approaches to systematize the scientific, technical and socio-economic determinants of financial institutions modern transformation are proposed. In particular, it has been proved the important role of two groups of factors that affect the formation of financial institutions in the global economy. First group introduces changes in the endowment structure, due to a rapid decline in the importance of material stocks (both natural and capital resources) to determine the positionof the country in the international division of labor. Second group introduces the process of economic development’s socialization, which author proposes to consider in the light of the long-term upward trend in the share of the social product that serves the reproduction and development of human resources, including – through non-market mechanisms for government funding and producing public goods and quasi-public goods. The article reveals contradictory role of financial institutions, including the stock markets in determining the manifestations of these two global trends in different countries. Inter alia, it has been substantiated the thesis that the growth of power the capital reproduction’s system, coupled with the development of financial mechanisms of accumulation and redistribution of purchasing power, causes qualitative transformation of mechanisms for determining the value of financial assets: amount of the asset is not now determined by the socially necessary costs for its creation or lost income from alternative possibilities. Only the expected rate of return of an asset is the basis to determine its present value and limits the owner’s ability to pay. That fundamentally changes the relationship between the public and the owners of financial assets.

The author substantiates the specific features of national models of interaction between the real and financial sectors of the economic, fullness of expression of which affects the country's ability to solve the contradiction between the need to broaden the financial base of investment in human development and problems of economy’s financial stability, including the following ones: the subordination of financial institutions to providing capital mobility and identification of priority directions of its use, according to social significance of alternatives; standardization, transparency and the expensiveness of procedures for access to information which important for assessing the expected rate of return on financial assets; the possibility of individual players to influence the financial market; the efficacy of social control mechanisms by operation of financial institutions.