Developing Countries and the Globalization of Financial Markets

Malcolm Knight

No 1998/105, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes the impact of the globalization of financial markets on developing and transition economies. Differences between the responses of competitive and imperfectly competitive banking sectors cause them to affect economic activity differently. While nonbank financial markets and institutions can help to increase the competitiveness of banking sectors, there are “gaps” in the institutions and market structures of developing and transition economies. Eliminating these gaps may reinforce financial market discipline in these countries. Some current international initiatives are outlined for enhancing financial system soundness; these emphasize the complementary roles of market discipline and official oversight in an environment of globalized markets.

Keywords: WP; market discipline; central bank; demand curve; financial system soundness; government securities market; Capital flows; developing and transition economies; banking; financial markets; supervision; international cooperation; banking industry; imperfect competition; functioning market; sound financial system; market regulator; Commercial banks; Stock markets; Emerging and frontier financial markets; Loans; Financial sector stability; Global; Asia and Pacific; Middle East (search for similar items in EconPapers)
Pages: 34
Date: 1998-07-01
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Citations: View citations in EconPapers (41)

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