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Making finance serve society, the economy and the environment

Ways to make the financial system better serve Europe’s economic, social and environmental needs are to be explored by a €10m international research project.

Financialisation, Economy, Society and Sustainable Development (FESSUD) is led by the University of Leeds and involves 13 other leading universities from across Europe and South Africa, and one non-government organisation. FESSUD is largely funded by a near-€8m grant from the European Commission under its Framework Programme 7.

The five-year project brings together economists and other social scientists to look at how financialisation - the increasing dominance of the financial system over other parts of the economy - has affected the performances of national economies and the global economy in the last 30 years. The project combines different methods and perspectives and seeks to address how finance can be reformed in a way that achieves the key objectives of economic, social, and environmental sustainability.

Malcolm Sawyer, Professor of Economics at Leeds University Business School, is leading the project. He said: "FESSUD brings together expertise from many leading universities to look afresh at how the financial system affects the world around us. We need to know what can be done to make the financial system work for society, the economy and the environment and not - as has sometimes been the case - the other way round.

"The key questions we will be looking at include - how has financialisation affected the achievement of economic, social, and environmental objectives? What is the nature of the relationship between financialisation and the sustainability of the financial system, economic development and the environment? What lessons are to be drawn from the crisis about the nature and evolution of finance?"

In their bid call, the European Commission said: "The role of private finance in the economy has increased enormously since the early 1970s, both in terms of its share of the economy and especially its influence on the 'real economy' and society. Financial de-regulation has led to the emergence of new kinds of finance activities and of new kinds of finance actors.

"Alongside this there has been a major shift in the activities carried out by banks and various types of funds. Financial innovation allowed by deregulation, including the huge development of derivatives and securitisation, has exploded. However, with the deepening of the financial and economic crisis from 2007 - 2008, these developments have increasingly been questioned, in terms of their impact and effectiveness in serving economic, social and environmental objectives over the longer term.

"This challenge concerns both the existing role of finance in the economy and what should be its appropriate roles in relation to the public interest. The research would face the challenge of understanding the changing role of private finance (economic, social, political roles), its impact, how it might better serve economic, social and environmental objectives, and the outlook for the future."

Ends

Professor Malcolm Sawyer is available for interview. Contact - Guy Dixon, University of Leeds media relations: 0113 343 8299 or g.dixon@leeds.ac.uk

FESSUD contact details: email fessud@leeds.ac.uk

Financialisation, Economy, Society and Sustainable Development (FESSUD) is a 10 million euro project largely funded by a near 8 million euro grant from the European Commission under Framework Programme 7 (contract number : 266800). The FESSUD project was the successful proposal amongst those which were submitted in response to the call by the European Commission in the Framework Seven programme for bids which would focus on 'changing the role of the financial system to better serve economic, social and environmental objectives' (call for SSH.2010.1.2-1).

The University of Leeds is the lead co-ordinator for the research project with a budget of over 2 million euros. The principal investigator at the University of Leeds is Professor Malcolm Sawyer, with Dr Andrew Brown, Professor Giuseppe Fontana, Professor Andy Gouldson and Dr David Spencer as co-investigators. The project manager is Ms Helen Evans.

The FESSUD project commences on 1 December 2011, and the 'kick-off' meeting for the project involving partners and members of the Scientific Advisory Committee of FESSUD will be held 18 to 20 January at the University of Leeds.

The partners in the consortium are:

Participant Number

Participant organisation name

Country

1 (Coordinator)

University of Leeds

UK

2

University of Sienna

Italy

3

School of Oriental and African Studies

UK

4

Fondation Nationale des Sciences Politiques

France

5

Pour la Solidarite, Brussels

Belgium

6

Poznan University of Economics

Poland

7

Tallin Technical University

Estonia

8

Berlin School of Economics and Law

Germany

9

Centre for Social Studies, University of Coimbra

Portugal

10

University of Pannonia, Veszprem

Hungary

11

National and Kapodistrian University of Athens

Greece

12

Middle Eastern Technical University, Ankara

Turkey

13

University of Lund

Sweden

14

University of Witwatersrand

South Africa

15

University of the Basque Country, Bilbao

Spain

The research programme is organised in terms of work packages. The work packages are:

1

Management

2

Comparative Perspectives on Financial Systems in the EU

3

Crisis and consequences of the financial crisis

4

Regulation of the financial sector

5

Finance and well-being

6

Finance, development and global governance

7

Finance, environment and sustainability

8

Finance, real economy and the State

9

Financial stability and macroeconomic policies

10

Dissemination and impact

11

Foresight

12

Synthesis and conclusions