G L O B A L I Z AT I O N O F

FINANCIAL MARKETS
 INTRODUCTION
Financial globalization refers to the internationalization or integration of financial
markets.
The creation of a unified financial market and facilitating the free flow of capital
around the world are the main goals of this globalization.
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TYPES OF FINANCIAL MARKETS

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FINANCIAL MARKETS'
DIFFERENT TYPES
o stock exchange
For example;  Dow Jones Industrial Average (DJIA) 

o Bond market
Investors purchase bonds from a firm, and the company
returns the bond's principal and interest within a predetermined
time frame.
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G L O B A L I Z AT I O N O F
FINANCIAL MARKETS
International Bond Markets

 Foreign bonds

sold in a foreign nation and valued in that nation's money

 Euro bonds

denominated in a currency that is not the currency of the nation in which

it is being sold
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Benefits of Financial Criticism of

Globalization financial globalization 
o improve living conditions
o Investing Possibilities
o Reduced Capital Cost
o Resource Distribution
 IF IT IS NOT
E X O R B I TA N T, A
N AT I O N A L D E B T W I L L
B E N E F I T U S A S A N AT I O N .
Alexander Hamilton
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EVIDENCES
o Cross-border financial flows can be used to gauge how globally oriented financial markets are.

o According to Bordo, Eichengreen, and Kim (1998), the absolute value of the ratio of the current account
balance to Gross Domestic Product(GDP)is a good predictor of cross-border financial flows.

o They demonstrate that although this indicator has risen slightly since the mid-1960s, it has not yet reached the
levels seen from the mid-1870s to 1914.
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EVIDENCE

o The subject of measuring co-movements between financial prices is addressed by Forbes and Rigobon (1999).

o They contend that conventional methods of estimating coefficients of correlation can be deceptive when
volatility varies over time.

o According to Forbes and Rigobon (1999), there was no evidence of changing coefficients of correlation during
various periods of stock market volatility, such as the 1987 US stock market crash, the 1994 Mexican peso
collapse, and the 1997 East Asian crises.
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EVIDENCE

o Obstfeld (1994) contends that risk diversification results in a global portfolio shift to higher risk but more
productive assets.

o Consequently, increased economic growth and financial market integration will significantly improve the
economic climate.

o According to Levine (2001), an improved financial system with more credit is important since it promotes
economic growth.
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EVIDENCE
o Johnson, Boone, Breach, and Friedman (2000) demonstrate how poor corporate governance can negatively
impact the economy, cause devaluation of the currency, and trigger recessions.

• According to Crockett (2000), the advancements in information technology have had three main effects
on the financial services industry:

• (1) They encouraged a greater use of international financial institutions,

(2) They caused a significant consolidation and restructuring of the global financial services industry,
• and

• (3) They gave rise to multinational banks and conglomerates that offer a variety of financial products and
services in a wide range of markets and countries.
 CONCLUSION
Financial markets offer consumers, businesses, and the government access to
financial services.

Despite the potential benefits of financial globalization, there are also new

challenges to face.