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Financial Globalization

Financial globalization refers to the increasing interconnectedness and integration of financial markets, institutions, and systems worldwide through the cross-border flow of capital. It has led to the rise of capital flows between countries, greater integration of global financial markets, and the expansion of multinational financial institutions operating across borders. While financial globalization has connected national economies and facilitated the diversification of risk, it has also increased financial interdependence and vulnerability to economic crises that can spread globally through integrated financial markets and institutions.

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Alie Lee Geolaga
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97 views

Financial Globalization

Financial globalization refers to the increasing interconnectedness and integration of financial markets, institutions, and systems worldwide through the cross-border flow of capital. It has led to the rise of capital flows between countries, greater integration of global financial markets, and the expansion of multinational financial institutions operating across borders. While financial globalization has connected national economies and facilitated the diversification of risk, it has also increased financial interdependence and vulnerability to economic crises that can spread globally through integrated financial markets and institutions.

Uploaded by

Alie Lee Geolaga
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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FINANCIAL GLOBALIZATION

GROUP 1
FINANCIAL
GLOBALIZATION the interconnectedness and integration of
financial markets, institutions, and economies on a
global scale. .
DEFINITION
the cross-border flow of capital, investments, and
financial services, creating interdependence among
different countries' financial systems.
FINANCIAL
GLOBALIZATION

FINANCIAL MARKETS FINANCIAL


CAPITAL FLOWS
INTEGRATION INSTITUTIONS
This includes foreign
Globalization has led to
direct investment (FDI), It involves the convergence of
the expansion of
portfolio investment financial markets worldwide,
multinational financial
(such as stocks and enabling investors to access a
institutions, including
bonds), and loans from broader range of investment
banks, investment banks,
multinational opportunities and allowing
insurance companies, and
corporations, companies to raise capital from
asset management firms.
institutional investors, diverse sources globally.
and individuals.
FINANCIAL
GLOBALIZATION

TECHNOLOGY
REGULATORY
HARMONIZATION
DIVERSIFICATION AND
INNOVATION
International organizations such It allows investors and firms
Innovations such as high-
as the International Monetary to diversify their risks by
frequency trading, algorithmic
Fund (IMF), World Bank, and accessing a more extensive
trading, and blockchain
Financial Stability Board (FSB) play pool of assets and markets.
technology have transformed
a significant role in promoting
the way financial markets
regulatory cooperation and
operate and interact globally.
convergence.
EXAMPLES
FOREIGN DIRECT CROSS-BORDER BANKING
GLOBAL STOCK MARKET
INVESTMENT (FDI) IN AND FINANCIAL
INTEGRATION
EMERGING MARKETS INSTITUTIONS
Japanese Investment in Advances in International
Philippine Automotive technology and banks and
Manufacturing communication financial
allow investors to easily trade institutions
stocks on global exchanges, operate across
TOYOTA
leading to a more interconnected borders, offering a wide range of
and interdependent global stock financial services to clients
HONDA market. globally.
IMPORTANT IMPLICATIONS ON FINANCIAL GLOBALIZATION

1. INCREASED CAPITAL 2.INTEGRATION OF 3. FINANCIAL INNOVATION


FLOWS: FINANCIAL MARKETS: AND TECHNOLOGY:

Globalization has facilitated the Financial globalization has spurred


Financial globalization has led to a
integration of financial markets, innovation and the adoption of
surge in cross-border capital flows, leading to greater technology in financial services. For
allowing investors to diversify their interconnectedness and
instance, the rise of fintech
portfolios internationally. For interdependence. One example is
companies offering digital payment
example, multinational the impact of the 2008 financial
solutions and peer-to-peer lending
corporations can raise capital by crisis, which originated in the United
States but quickly spread to other platforms has transformed the
issuing bonds in foreign markets,
parts of the world, demonstrating financial landscape, making
such as a Chinese company issuing
the interconnected nature of global financial services more accessible
bonds in the United States.
financial markets. and efficient globally.
IMPORTANT IMPLICATIONS ON FINANCIAL GLOBALIZATION

4. INCREASED FINANCIAL RISK: 5. INCOME INEQUALITY AND SOCIAL IMPACT:

While financial globalization offers Financial globalization can exacerbate income


opportunities for economic growth and inequality within and between countries. For
development, it also poses risks, such as instance, multinational corporations may exploit
heightened financial volatility and contagion. differences in labor regulations and wage rates
For example, the Asian financial crisis of across countries, leading to disparities in income
1997-1998 demonstrated how rapid capital and living standards. Additionally, financial crises
outflows and currency devaluations in one
can disproportionately affect vulnerable
region can spread to other countries, causing
populations, leading to social unrest and political
widespread economic instability.
instability.
1. Money Movement: REPERCUSSIONS
REPERCUSSIONS
Spreads investment chances. Rules Difficulty:
Helps growth in new markets.
4. Makes global rules hard.
Promotes rule loopholes.
Risk Spread:
2. Shares financial problems globally. Money Gap:
Makes markets more unstable. 5. Widens wealth differences.
Pushes wages down.

Price Changes: Country Control:


3. Makes asset prices swing more. Limits national decision-making.
Influenced by speculation 6. Raises questions about who's in
charge.
CURRENCY CRISES:

Makes countries more vulnerable.


Causes money value drop.

HELP FOR NEW COUNTRIES:

Lets them get investment and


money.
Helps them grow and fight poverty.
THANK YOU!

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