International Capital Markets: Structure and Response in an Era of Instability

There is widespread concern about the functioning of financial markets. To examine the issue, one must examine in which governmental jurisdictions and through which financial channels funds are transferred from savers to investors. Resources move through 2 basic channels: 1. financial intermediaries...

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Bibliographic Details
Published in:MIT Sloan management review 1981-04, Vol.22 (3), p.35
Main Author: Dufey, Gunter
Format: Article
Language:English
Subjects:
Banking
Capital markets
Currency
Eurobonds
Euromarkets
International
International finance
Markets
Offshore
Regulation
Structure
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Summary:There is widespread concern about the functioning of financial markets. To examine the issue, one must examine in which governmental jurisdictions and through which financial channels funds are transferred from savers to investors. Resources move through 2 basic channels: 1. financial intermediaries and 2. organized security markets. The different capital markets are distinguished by the proportions of funds channeled through each. Given various scenarios of macroeconomic instability, analysis indicates a high probability that markets will continue to perform their function of providing financial capital. This will occur if the banks and corporations develop appropriate legal structures and internal financial strategies that give them simultaneous access to several segments of the world capital markets. The world capital markets consist basically of fragmented national markets which are integrated through a system of growing parallel external markets. Increased instability favors universal financial intermediaries as the institutions best able to cope with rapid changes.
ISSN:1532-9194