Implications Of The Globalization Process On The Efficiency And Stability Of Financial Systems

Financial globalization consists in the cumulative effect of the capital market, mobility and capital(foreign investment) and external debt which, together, form the basis of the global financial system which aims to become the pivot of economic development of all countries, to develop international trade and to contribute to the equitable distribution of income between nationsa a and to intervene inthe aid of countries. In the definition of globalization, the basic meaning of its economic part was to integrate the world's economies through trade and financial flows. Thus, two different meanings can be noticed: financial globalization refers to the global links that are created through international financial flows, and financial integration concerns the links of some countries as an individual action with the international capital markets. Financial globalization involves increasing the volume of financial capital flows and increasing their intensity, processes whose size can be measured by the degree of openness of national financial markets, the level of financial engagement and the degree of financial integration. The opening of national financial markets refers to the removal of legal restrictions on international financial transactions. The level of financial engagement refers to the degree of national involvement in global financial activity and can be measured by indicators such as: share of foreign financial assets in domestic markets, degree of involvement of foreign financial institutions in domestic financial markets, share of domestic financial assets in markets the degree of involvement of national financial institutions in external financial markets, the national contribution to various global financia flows. The term financial integration implies the convergence of prices and yields of similar financial asset packages in different national financial markets. The importance of the researched topic lies in the fact that it addresses the capital market segment, which has evolutionary theoretical meanings and major practical implications, arising from the complex relationships between the allocation of available resources and the efficient and optimal use of capital demand in an economy.