Crowding out or crowding in?: Investment and financialization across generations within family firms in an emerging market

In this study, we provide new insight into the financialization of the Turkish economy at the intergenerational level for family manufacturing firms from 2001 to 2019, using a dynamic panel generalized method of moments. The results indicate that financialization patterns differ across generations. The second-generation managers achieve a crowding-in effect through non-operational investment income-based financialization, whereas the first-generation managers rely on non-operational interest income channels that crowd out corporate investment. Additionally, professional CEOs use non-operational investment income to reduce real investment, while their use of non-operational interest income supports and increases productive investments within the family-manufacturing firms.