The financial globalization: opportunities and challenges in the period of financial crises

Madzova, Violeta and Davcev, Ljupco (2013) The financial globalization: opportunities and challenges in the period of financial crises. In: Трета меѓународна научна конференција „Промените во глобалното општество“, 6-7 June 2013, Скопје.

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Abstract

One of the main benefits of financial globalization is the development of the financial sector. Financial markets become deeper and more sophisticated when they integrate with world markets, increasing the financial alternatives for borrowers and investors. Financial markets operating in a global environment enable international risk diversification and facilitate consumption smoothing. Financial globalization leads to a better financial infrastructure, which mitigates information asymmetries and, as a consequence, reduces problems such as adverse selection and moral hazard. Although financial globalization has several potential benefits, it also poses new challenges and risks.These risks are more likely to appear in the short run, when countries open up, but it depends if the countries are developed or developing ones . The negative effect of globalization can also be highlighted in the period of financial or other type of crises. So, the crises of the 1990s, after many countries liberalized their financial system, as well as the recent financial crisis from 2007, have questioned in part the gains of globalization. Countries become exposed to external shocks and crises not only generated in their own country but also from contagion effects, as a direct product from globalization process. This paper tends to present the challenges of the financial globalization on both developed and developing countries (including countries in transition), as well as to analyze whether the globalization can be seen rather as a source and accelerator of the global crises or as a buffer for reducing crisis impact.

Item Type: Conference or Workshop Item (Paper)
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Violeta Madzova
Date Deposited: 06 Sep 2013 07:54
Last Modified: 06 Sep 2013 07:54
URI: http://eprints.ugd.edu.mk/id/eprint/7191

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