International Capital Markets

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International Capital Markets

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International Capital Markets

The Impacts of Financial Deregulation and Capital Control on Financial Globalization and International Diversification

The defining element of the evolution of financial activity from the last decades aims a separation of the financial flows from the national territorial area, in close relationship with the trade liberalization, expansion of the transnational corporations and the circulation of the labor force. If in the past, the companies had difficulties in transferring money from one country to another, due to the complicated procedures the cancellation of an obligation or paying some rights had to follow, the things are simpler these days. The financial situations of the economic entities, the course of shares and bonds, the operations of any type can be easily monitored. The banks and the corporations may immediately react to the change of prices and exchange rate, due to the easiness in obtaining the information from the stock exchange markets. (Kitsios 2009, 17)

At a general view, the innovating evolution and the one of dynamic change of the political climate, any economic tension or of any kind is found with a very strong intensity at the level of the financial activity, justifying us to talk about shaping a globally financial area. The financial globalization can be described in a simple manner as a complex process of increasing the interdependencies worldwide based upon the trans-frontier financial flows, the integration of markets and shaping a unique market of capitals, functional at the scale of the entire planet. (Combe 2009, 394)

The fast circulation of information and the standardization of the financial instruments are clear marks that the economies of different states advance to a strongly integrated system, a worldwide financial market define by a triple unit:

• The time unit or the uninterrupted functioning of the market, 24 hours of 24 hours, in the Far East, Europe and North America, meaning that a financial operator can continue any time of a day the operations on another market, that are opened after the initial ones are closed;

• The place unit: the same financial instruments may be simultaneous transacted on numerous national and international markets (e.g.: the actions of a company at more stock exchanges around the world);

• The operations unit: on all national financial operations are met the same types of financial instruments and the same types of financial operations are made with them. Starting from the pertinent statements of the British magazine The Economist, such as “the financial markets are the players and the jury of any economic policy” the question is if the financial market becomes a universal source of wellness and the guardian of the worldwide economic sense?

The answer is not a simple one, and in order to formulate a pertinent conclusion we need a complete image upon all dimensions of the financial globalization, starting from its defining elements, the changes that were induced at the level of markets the associated benefices. (Laursen 2001, 1)

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