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Financial Globalization: Opportunity and Crisis (Intl. capital market…
Financial Globalization:
Opportunity and Crisis
Intl. capital market & gains from trade
gains from trade
trades of goods/services for assets
trades of assets for assets
trades of goods/services for goods/services
equity instruments (e.g. stock share)
portfolio diversification
risk aversion
debt instruments (e.g. bonds & bank deposits)
Intl. Banking and the Intl. Capital Market
market structure
central banks & other govs. agencies
commercial banks
corporations
nonbank financia institutions
Offshore Banking & Currency Trading
foreign branch
agency
subsidiary
The Growth of Eurocurrency Trading (Eurodollar)
Shadow banking system
Regulatory assymetries :!:
Regulating Intl. banking
difficulties
uncertainty (CB - LLR assistance)
enforcing asset restrictions
:red_cross: deposit insurance
:red_cross: overseas reserve requirements
enforcing capital requirements
Problem of bank failure
lend last resort facilities
capital requirements & asset restrictions
deposit insurance
reserve requirements
bank examination
gov.-organized bailouts
International Regulatory Cooperation
Intl. Markets' risk & capital allocation
Efficiency of the Foreign Exchange Market
excessive volatility
risk premiums
interest parity
Onshore-Offshore Interest Differentials
The Extent of Intertemporal Trade
Extent of Intl. Portfolio Diversification