Financial Globalization : A Glass Half Empty?
Since the 1970s, the world has embarked on a new financial globalization era. Cross-country capital flows have significantly increased in developed and developing countries. However, the characteristics of financial globalization differ from what w...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/990491505323961395/Financial-globalization-a-glass-half-empty http://hdl.handle.net/10986/28372 |
| Summary: | Since the 1970s, the world has embarked
on a new financial globalization era. Cross-country capital
flows have significantly increased in developed and
developing countries. However, the characteristics of
financial globalization differ from what was originally
expected. Various examples illustrate this point. Although
the literature predicted large gains from financial
globalization (such as additional funding, broad
diversification, and deeper financial systems), the positive
effects have been more limited. In developed and developing
countries, financial globalization has manifested in
increasing gross capital flows (inflows and outflows) rather
than larger net flows. Capital markets are segmented and
only a few large firms access international markets.
International institutional investors do not seem to have
played a stabilizing role, helping to exacerbate and
transmit crises across countries. Although financial
globalization has brought several beneficial changes, its
net effects and spillovers to the overall economies
participating in it have yet to be understood. |
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