• SHARE

LONDON — For at least a quarter-century, the financial sector has grown far more rapidly than the economy as a whole, both in developed and in most developing countries. The ratio of total financial assets (stocks, bonds, and bank deposits) to gross domestic product (GDP) in the United Kingdom was about 100 percent in 1980, while by 2006 it had risen to around 440 percent. In China, financial assets went from being virtually nonexistent to well over 300 percent of GDP during this period.

As the size of the financial industry grew, so, too, did its profitability. The share of total profits of companies in the United States represented by financial firms rocketed from 10 percent in 1980 to 40 percent in 2006. Against that background, it is not surprising that pay in the financial sector soared. The City of London, lower Manhattan, and a few other centers became money machines that made investment bankers, hedge-fund managers, and private equity folk immoderately wealthy. University leaders like me spent much of our time persuading them to recycle a portion of their gains to their old schools.

Unable to view this article?

This could be due to a conflict with your ad-blocking or security software.

Please add japantimes.co.jp and piano.io to your list of allowed sites.

If this does not resolve the issue or you are unable to add the domains to your allowlist, please see out this support page.

We humbly apologize for the inconvenience.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.

SUBSCRIBE NOW