CONTEMPORARY WORLD / BSA 1-1

GLOBALIZATION

OF FINANCIAL

AND CAPITAL

MARKET

GRP 10 / AGUILAR / AGULLANA / ALIBIN / ALSIM / ARAMBULO

 50
•A PLACE IN
WHICH PEOPLE
IN-
40
TRADE FINANCIAL
ASSETS AT LOW
DEPTH:30

TRANSACTION
Financial
20

COSTS
Market10

•SECURITIES
0
Item 1 Item 2 Item 3 Item 4 Item 5
INCLUDE STOCKS
AND BONDS
1 MONEY 2
MARKET
CAPITAL
low-risk
MARKET
and short-
deals with
term
long-term
securities
securities TTYYPPE
ESSOOFF
FFIIN
NAAN
NCCIIA
ALL
MMAARRKKE
ETT
6 BASIC FUNCTIONS OF FINANCIAL MARKETS

BORROWING RISK
& LENDING SHARING

PRICE LIQUIDITY
DETERMINATION

INFORMATION
AGGREGATION & EFFICIENCY
COORDINATION
 UPS AND DOWNS OF FINANCIAL MARKETS

ADVANTAGE DISADVANTAGE
-access debt resources
outside their market
-underpricing, higher
through bank loans &
underwriting, professional
foreign bond issues
fees and such; greater risks of
lawsuits and home bias on
-easier for firms to access
the part of investors
capital outside their home
countries
 UPS AND DOWNS OF CAPITAL MARKET

ADVANTAGES DISADVANTAGES
-increases proportion
of long-term savings -protection is not
(pension) automatically
-enables contractual
provided by no-par
saving industry
(insurance companies) stock
 WORLD
INTERNATIONAL

FINANCIAL
BANK
INSTITUTIONS EUROPEAN
INVESTMENT
BANK
ASIAN
DEVELOPMENT
BANK
BOTTOM LINE