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Task 1: Financial
Integration
Financial integration is
a phenomenon used in the financial markets connecting with the global market
that is closer. They are connected through cross border and participation with the
financial market based on domestic markets. Sometimes, there may be legal
restrictions that could be a hurdle in financial integration. Financial
integration is implemented to gain better governance, better capital allocation,
and more development in the investment. According to one perspective, improve
the allocation in the productivity of capital, and then again, help enhance
risk. However, the ongoing global monetary emergency, which is broadly viewed
as the most extremely horrible since the Great Depression, has brought up an
issue imprint to the referred to benefits and showed that the expense of money
related that could be considerable. This paper presents key ideas and effects
of monetary combination, while the company's situation of budgetary joining is
examined under our introduced system of financial integration
Several benefits of
international financial integration reviewed with the different types of the
investors individually or in the form of group. It may also be an opportunity for
risk diversification with the implications of financial integration in the
market. This section of the paper is related to the potential benefits that
could be helpful in the financial markets. Followings are the benefits that
could be related to financial integration explained below:
●
Smooth
utilization of Financial integration is a phenomenon
In the world of the capital market, every country wants
to deal with the other country by keeping on the safe side to share risk in a different
portion of consumption. It allowed the companies to get loans in bad times that
help the weak country to emerge in the market with the low investment and make
the investment secure as there is less risk that is bear by one company
●
Domestic
investment and growth of Financial
integration is a phenomenon
The ability to get approval from the financial market
with domestic investment as well as growth in international investment is
remarkable in the financial market. There are many countries in the world where
per capita income is low and the saving capacity of the people is low. It could
decrease the investment level of the countries. With the facility of borrowed
capital, there are chances to improve the investment and growth in the domestic
level that gives rise to development on the international level. These are the
potential benefits that are used in the capital flow in foreign direct
investment.
●
Enhanced
economic discipline
It is also helpful in the enhanced in the reward of the
better policies that are used in the high frequency to overcome the policies in
the financial market. It helps to plan a better policy that will be helpful in
the stability of the macroeconomics with the higher and developed return rates
in the market. It could help manage the budget deficit with the inflation rate
●
The efficient
banking system and stability
It is used in the arguments in the favor of financial
market that could be a reason for an increase in the financial market to
increase efficiency by lowering the cost and associated profit in the market to
improve the mark up in the market. It improved the efficiency of the investment
with a higher rate of growth and development.
Further, it helps to;
●
Improving the quality and availability of the
financial market by serving the domestic market by enhancing the capability of
the investment with the market technology and techniques which could improve
the efficiency of decreasing the cost of the investment.
●
It could increase the international capital with
the direct and indirect techniques used by financial institutions. Furthermore,
the foreign institution could improve the quality of the loan that is based on
the domestic investment which is involved in the state of the country.
Financial
integration is working with the financial market with policymakers to get the
recognition with the potential benefits to gain in the market there must be
proper as there are some limitations that have to face in the financial
integration
●
Lack of
access of Financial integration is a phenomenon
There are historical pieces of evidence that are used in
the period of cross border transactions in small and large numbers with the
different countries. It could increase capital inflows to direct with countries
of the Middle East. Different ways could increase capital inflow but there must
be access to the capital inflows in the public and private companies.
●
Misallocation
of capital inflows
There are descriptions about the capital inflow to raise
the investment at the domestic level. It could be low productivity in the
investment of the sectors that is based on the economies of the capacity to get
the growing external imbalance to overcome the capacity of the economy to
export lead in the imbalance of capital.
●
Loss of
stability of Financial integration is a phenomenon
When capital inflows based on the large financial open
that could be used in the undesired effects to increase the expansion in the
money market is suitable in the expansionary. With the flexible rate of return,
there are chances to grow the currency rate with the sustainability of the
components in the money market.
●
Short
term flows of Financial integration is a phenomenon
Small developing economies in the country are ranked as
best in the market which is considered to work with more potential in the
market. Different countries are dealing in the money market but due to the risk
of decreasing values, there are chances to invest in the short term loans and
it resulted in the lack of long term investment in the market and also develops
a short investment.
●
Volatility
and capital flow
There is a high level of money related receptiveness that
might be helpful for a high level of volatility in capital developments, a
particular indication of which being huge inversions in passing flow related
with theoretical weights on the household money. The higher the degree of
temporary obligation is comparative with the getting nation's global stores,
the more remarkable the danger of such runs will be. There are significant
levels of momentary liabilities intermediated by the money related framework
additionally make dangers of bank runs and foundational money related
emergencies.
There is a discussion about the benefits and the
drawbacks of financial integration in the market that show different outcomes
related to the operations of the financial market to get the growth and
development in the market. As there are also limitations of financial
integration there are also benefits that could be more fruitful by investing in
the foreign market. There might be a chance of hazard broadening with the
outcomes of money related to coordination in the market. With the office of
acquired capital, there are opportunities to improve the venture and
development at the local level that offers rise to advancement on the global
level
The report is concluded with the impacts of the advantages and disadvantages of financial integration in the market. There may be an opportunity for risk diversification with the implications of financial integration in the market. Financial integration helps to household consumption on the time based and according to the capital flows in the market. This also plays the role of the capital market in the times of shocks available in the temporary nature. It makes the foreign institution could improve the quality of the loan that is based on the domestic investment which is involved in the state of the country. But some impacts make financial integration working with the financial market with policymakers to get the recognition with the potential benefits to gain in the market there must be proper as there are some limitations that have to face in the financial integration and it could be a negative impact on the financial market.
Task:2 Financial crisis
Introduction of Financial integration is a
phenomenon
A financial crisis is not
a new concept in the financial market that is dealing in the operations of the
financial market to form the capital market in the flow of the different
sectors in the financial market. In the economy of the US, there are chances to
make the financial market more accurate in the development of the investment. A
financial crisis is a situation that is used to know the situation of financial
of an economy in the weak position and the situation that explain the lowest
position of the investment in the market. A financial crisis is the worst
situation of the economy that is faced by the people while conducting the
investment in the resources of the investment to increase the growth and
development in the economy. It refers to the situation that is used to explain
the unfavorable situation of the market
Several reasons could be the
cause of the financial crisis in the economy. In this reason, there is a lot of
hand of banks and financial institutions that they allow the unsystematic flow
of money in the economy. Followings are the explanation of the causes of the financial
crisis in the economy:
● The inflow of excess money
With
every transaction when a bank gives loans to the customers they created money
in the economy. In the financial crisis, banks perform a major role by making a
transaction in the loans. There is only required 7 years that are required to
produce the amount of loan to be equal to the amount that is paid for the loan.
Excess availability of the money could cause of the financial crisis in the
economy
● Bad debts in the economy
Lending
a large number of debts to people increase the chances to increase the portion
of the bad debts in the market as it could speculation that some debts remain
unpayable and it could cause in the rise in the money that is circulated in the
economy. At this stage, there must be stopped in the repayment of the banks in
the risk that it could be a risk in the bankruptcy.
● Liquidity effects of Financial integration
is a phenomenon
In
the crisis of financial sectors that are made to get the credit expansion in
the economy of the credit expansion as it becomes the cause of the financial
crisis. When there is more liquidity in the economy there are chances to choose
the better system in the economy that provides enough support to the economy.
An advantage in the liquidity cost happens when individuals put resources into
a market since they figure the rising in cost that will keep on expanding. The
interest from speculators at that point causes the advantage cost to ascend in
an inevitable cycle. The expansion in cost is because of theory and isn't
remaining constant by any basic changes popular and supply in the economy.
● Credit default swaps
There
are financial instruments in the financial market that were developed by the JP
Morgan credit rating agency that banks allow their customers to swap the credit
or liability. This situation is faced by the clients dealing with the credit
risk that will be helpful to share the risk. Many companies are dealing with
credit problems related to payment and default. In this swapping of liabilities
create an artificial movement of the money could create a supply of money that
causes inflation in the economy and produces a financial crisis in the market
● Economic assumption
If
there are the following economic policies that are generally assumed in the
crisis of the prices that are based on the assumptions of the underwriters in
the mortgage of securities that are related to the high risk. As we know that
securities mortgages must be risk-free so there could be chances to have a
decrease in the value of the product and may cause financial risk.
These causes or not the
last that could affect the economy of the country several others could be
caused by the money related emergency. To learn about after the emergency,
banks restricted their new loaning to organizations and family units. The changes
in the economy that based on the economy based on loaning made costs in these
business sectors drop and this implies those that have obtained a lot to guess
on rising costs needed to offer their advantages to reimburse their credits.
Liquidity costs dropped and the air pocket burst and there may be a rise in the
circulation of money. Subsequently, banks terrified and cut loaning much
further. A descending winding in this manner starts and the economy tips into
recession.
Impact of the financial crisis on the economic
growth of different countries
The major purpose of this
section of the paper is to learn about the impact of the financial crisis on
the growth and development in the different countries and economy of the
country. There are large economies that are dealing with the development of the
Gross Domestic Product. With the financial crisis in the economy, there are
more trends toward the credit creation that restrict the credit policies and
due to which small companies may face difficulty in getting credit facility
that may restrict the investment in the economy.
Another impact on the
economy is also that it could be the reason for the high deficit in the budget
that may reduce the income of the government. It follows with the reduction in
government projects that reduce the opportunities for employment with the
generation of the projects. As concerned with the projects that are not last to
describe but explain the impacts of the financial crisis, the decrease in local
and remote projects is probably going to diminish the interest for work.
Because of the cut back of the formal segment business, there are several
specialists are probably going to count on the casual segment for work that is
described by lower wages and absence of social assurance in the economy to
generate the development
The effect of money
related crisis on youth or the small business especially in a South Asian
setting. Due to the non-accessibility of constant post emergency information,
there are the vast majority of these investigations have attempted
macroeconomic projections and recreation activities to evaluate the hardship
and distributional effect of the emergency in an ex risk way. To survey the
effect of money related emergency on poverty and work, it is critical to keep
apart the pause in monetary development because of worldwide budgetary
emergency from that because of other surface and household factors. In our
investigation, we separate different factors by controlling for nation explicit
impacts just as worldwide ware and sustenance value of the project.
Conclusion of Financial integration is a
phenomenon
The report is concluded
with a summary of the reasons that could be made possible for the financial
crisis in the market and it could be used in the investigation about the
financial crisis. There is a lot of hand of banks and financial institutions
that they allow the unsystematic flow of money in the economy. Financial
institutions are the main bodies that could be involved in the financial sector
of the economy. There are economic policies that are generally assumed in the
crisis of the prices that are based on the assumptions of the underwriters in
the mortgage of securities that are related with the high-risk Financial crisis
are the situation that is used to know the situation of financial of an economy
in the weak position and the situation that explain the lowest position of the
investment in the market. There are large economies that are dealing with the
development of the Gross Domestic Product. The changes in the economy that
based on the economy based on loaning made costs in these business sectors drop
and this implies those that have obtained a lot to guess on rising costs needed
to offer their advantages to reimburse their credits
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