Financial Market Integration
Introduction
In the field of financial securities, the integration concept has now become a crowding issue. Because due to the vast introduction of various securities the people are becoming, specially the investors and issuer of different securities, confused with various securities. They want all those items in a single place. Not only this, if the integration can be done in a real sense, there are variety of advantages with lower cost of dealing with those items. But to drive with those advantages the integaration precess need to be dealt which holds variety of forms with complex process of integration. Which ultimately brings huge benefit for the both issuer and the investors.
Financial market integration:
Financial integration is the process through which a country’s financial markets become more closely integrated with those in other countries or with those in the rest of the world. It implies the elimination of barriers for foreign financial institutions from some (or all) countries to operate or offer cross-border financial services in others. This may imply linking banking, equity and other types of financial markets. For example, a country with uniform tax laws and regulation usually has an integrated financial market because there are no circumstances where one 's return will be reduced because of tax restrictions or different regulation. In other words, in an integrated financial market, investments of the same risk always have exactly the same expected return. The European Union is an example of an integrated financial market.
Movement of financial market integration:
The integrated stock market movement has got the momentum during 1980s where financial linkages among developed economies have grown stronger and have opened up additional channels for cross-border relation. Market liberalization/deregulation, technological advances and removals of statutory controls are the reasons of rapidly increase of the integrated stock market movement.
In the field of financial securities, the integration concept has now become a crowding issue. Because due to the vast introduction of various securities the people are becoming, specially the investors and issuer of different securities, confused with various securities. They want all those items in a single place. Not only this, if the integration can be done in a real sense, there are variety of advantages with lower cost of dealing with those items. But to drive with those advantages the integaration precess need to be dealt which holds variety of forms with complex process of integration. Which ultimately brings huge benefit for the both issuer and the investors.
Financial market integration:
Financial integration is the process through which a country’s financial markets become more closely integrated with those in other countries or with those in the rest of the world. It implies the elimination of barriers for foreign financial institutions from some (or all) countries to operate or offer cross-border financial services in others. This may imply linking banking, equity and other types of financial markets. For example, a country with uniform tax laws and regulation usually has an integrated financial market because there are no circumstances where one 's return will be reduced because of tax restrictions or different regulation. In other words, in an integrated financial market, investments of the same risk always have exactly the same expected return. The European Union is an example of an integrated financial market.
Movement of financial market integration:
The integrated stock market movement has got the momentum during 1980s where financial linkages among developed economies have grown stronger and have opened up additional channels for cross-border relation. Market liberalization/deregulation, technological advances and removals of statutory controls are the reasons of rapidly increase of the integrated stock market movement.
References: 1. Jian Yang (2002), Stock market integration and financial crises: the case of Asia 2. Suk-Joong Kim (2006), Evolution of International Stock and Bond Market Integration: Influence of the European Monetary Union, journal of banking and finance 30:5, 15071534 3. Hazem A. Marashdeh (2010), Stock Market Integration in the GCC Countries, International Research Journal of Finance and Economics. 4. Alexandr Cerny (2004), Stock Market Integration and the Speed of Information Transmission. 5. Asian Bond Rules & Regulations – http://asianbondonline.adb.org/Islamic_finance/structure/rules.php 6. http://ecb.europa.eu/press/key/date/2012/html/sp121128.en.html 7. http://www.ecb.int/press/pr/date/2012/html/pr120426.en.html 13 Financial Market Integration