Globalization and National Financial Systems

James A. Hanson, Patrick Honohan and Giovanni Majnoni

No 15160 in World Bank Publications - Books from The World Bank Group

Abstract: The volume is divided into five traditional areas of finance: the macroeconomy, banking, securities markets, pension issues, and regulations. Four cross-cutting messages emerge. First, the erosion of national frontiers by trade, tourism, migration, and capital account liberalization means that residents of all countries have substantial financial assets, and often liabilities denominated in foreign currencies at home or abroad. Any analysis of national financial systems must take this into account. More important, this factor constrains governments' use of macroeconomic and financial policy and may contribute to economic fluctuations. Second, individuals and firms benefit substantially from the improved risk and return menu associated with global diversification. Diversification is of particular importance in developing countries where the lack of size and diversity of the national economy results in instability in the value of production. Third, the small size of most developing countries limits the efficiency and quality of financial services: banking, equity markets, and pensions. Thus cross-border provision of financial services, one facet of globalization, has potential benefits for small economies. Fourth, taking full advantage of the opportunities presented by globalization and minimizing its costs depend on effective regulation and supervision to ensure good quality information, transparency, market integrity, and prudent investing by banks and pension funds.

Keywords: Economic; Theory; and; Research; Banks; and; Banking; Reform; Finance; and; Financial; Sector; Development-Financial; Intermediation; Macroeconomics; and; Economic; Growth-Financial; Economics; Macroeconomics; and; Economic; Growth-Macroeconomic; Management (search for similar items in EconPapers)
Date: 2003
ISBN: 0-8213-5208-3
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Citations: View citations in EconPapers (32)

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