Publication: Globalization and National Financial Systems
Date
2003
ISSN
Published
2003
Author(s)
Hanson, James A.
Honohan, Patrick
Majnoni, Giovanni
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.
Citation
“Hanson, James A.; Honohan, Patrick; Majnoni, Giovanni. 2003. Globalization and National Financial Systems. © Washington, DC: World Bank and Oxford University Press. http://openknowledge.worldbank.org/entities/publication/d71fca55-c52a-5481-8516-dc608bf55709 License: CC BY 3.0 IGO.”