Finance and Financial Systems: Evolving Geographies of Crisis and Instability

This chapter explores geographical approaches to financial systems, with special attention to their instability. After examining the foundational contributions that launched the geography of finance, the chapter summarizes spatial research on the global spread of innovative practices in finance. It then asks why so little attention was paid to macro-aspects of financial crises prior to September 2008. A review of geographers’ research of sub-prime lending and crisis finds that this work, extensive as it is in analyzing the microfoundational aspects of sub-prime lending and securitization, pays no attention to the macro-dimension of financial instability. This lacuna is shared with mainstream macroeconomics, which famously failed to see the sub-prime crisis coming. The chapter then explores economist Hyman Minsky’s macro-approach to financial instability and crisis. The chapter concludes by arguing that developing a spatial analysis of financial instability should be a high priority for the emerging geography of finance.