nternational financial markets would lead to improvement in the economies of developing, less developed countries, and it would automatically enhance stability among developed countries. The major benefit accruing from international financial markets is more financial interconnection among different nations of world. It can also lead to a deeper integration of developing economies with the international financial markets. Especially the developing economies would be able to revamp and develop their financial system with the introduction of more complete, deeper, stable and better-regulated domestic financial markets because of their affiliation to international financial markets. Levine, (2001) suggests a better functioning financial system with more credit is likely to lead to faster economic growth.
Apart from direct growth benefits, development of international financial markets is likely to result in other collateral benefits like promotion of the development of domestic financial sector and imposing disciplines on the macroeconomic policies of the governments. It also leads to generation of more efficiency by encouraging competition and results in enhanced corporate governance and functioning of better governments. Since these benefits occur over a longer period, it is usual that the costs of globalization are detected more easily. The collateral long-term benefits of international financial markets can be traced through equity inflow and increased foreign direct investments into the domestic financial markets. However, it is difficult to identify the benefits of international financial markets, which enhance the productivity through empirical studies. An analysis of structural, institutional and macroeconomic policies across the country leading to growth of GDP or productivity would prove the benefits resulting from international financial markets. At the micro level, the positive impact of international financial markets can be felt in the capital account
Financial crises that happened during the late 1980s and 1990s have led to serious debates on the costs and benefits resulting from the development of international financial markets. Economists like Bhagwati, (1998) and Stiglitz, (2000) consider capital account liberalization…
The term globalization specific to the human environment is often used to describe the economic integration across the globe and changes caused by the diffusion of information in digital form, for example with the Internet. The significance of globalization cannot be overstated since it relates to increasing global interdependence in all areas including economy, politics, culture, environment, communication, etc.
can be supposed to be the attributing factors towards the development of financial innovation. Innovations are mainly done to achieve the basic objectives of financial systems like facilitating the required payment instruments, increased savings, reduction in costs, etc.
In financial practice it is not the question whether it is possible to forecast, but how the future path of a financial time series can be forecasted. Investors were obliged to revise this approach in the past eighteen months, due market crashes and historically high volatility.
Therefore, any modeling of financial assets is directed towards the reduction of the uncertainties & risks involved with the value of an asset or the pricing agreements that govern the variation of the determinants of financial assets' evaluation. Therefore, any such evaluation is performed so s to strike a perfect balance between the non-risky assets and the non-risky assets.
The author states that most governments and other corporate entities usually borrow from the market in form of bonds listed on the capital markets and they have a big effect on the mortgage interest rates. Commodities are also traded in the commodities future markets e.g. crude oil, copper and other minerals.
This increases the demand of host country's currency and hence the host country's currency appreciates at the expense of the multinational's local currency. When many multinationals carry out FDI, the impact is quite bigger and hits the financial markets harder.
Remarkably, the financial markets facilitate the connection between the well-developed financial institutions and the borrowers who want to invest more than they earn, which suits the needs of the savers and borrows; hence,
3 pages (750 words)Essay
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