Driving Forces of Financial Globalization

When we talk about financial globalization, there are four major factors to be considered. They are –

●      Advancement in information and communication technologies − Technological advancements have made market players and governments far more efficient in collecting the information needed to manage financial risks.

●      Globalization of national economies − Economic globalization has made production, consumption, and investments dispersed over various geographic locations. As barriers to international trade have been lowered, international flows of goods and services have dramatically increased.

●      Liberalization of national financial and capital markets − Liberalization and fast improvements in IT and the globalization of national economies have resulted in highly spread financial innovations. It has increased the growth of international capital movements.

●      Competition among intermediary services providers − Competition has increased manifold due to technological advancements and financial liberalization. A new class of nonbank financial entities, including institutional investors, have also emerged.

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