Factors behind the development and Internationalization of Capital Markets Essay

Financial markets especially the extend market has considerably developed in the past few decades. several(prenominal) occurrenceors have been seen to have aided in their growth and increase globally. It has in any case increased cross-border detonator movement, tight links amongst the financial market. The most all-important(prenominal) element of global market has been increased declivity exchange. This paper is so aimed at finding the factors which have led to the growing and Internationalization of stock exchange facility.Questions to be investigatedObjectively, the paper is to disclose the possible factors affecting the schooling and externalization of the capital markets. It is therefore worth notice that these questions has to be communicate What ar the factors that favor the development of international markets?, What are the hindrances in the exertion of fast development of international capital markets? And how do these factors that affect the development of in ternational capital markets affect the domestic markets?Factors influencing the Stock market development and internationalizationA least two possible views exists on how economic fundamentals may influence domestic stock market and internationalization. one and only(a) of the views is that split up institutional and macroeconomic environments spur much developed domestic stock markets hence reduces the need to of the use of international markets.The second partitioning of it is behind a number of youthful papers on internationalization, this has no longer been an international finance research topic. With regard to this view, it has been found that light domestic environments prompt firms and investors to use international markets to a greater extent intensively. In this, the worthless domestic environment has been is considered as one of the main reasons for capital dodging and greater use by domestic residents of all types of financial function tolerateed international ly (Collier et al, 1999). This also applies to the services offered by the stock markets, where firms may inadequacy to escape a poor domestic system with puny institutions.The recent papers done on where international marketers are considered to be to a greater extent attractive to the firms from poor institutional environments, this is because they offer better protection to investors. As a result, according to this view poor domestic markets lead to worsened domestic development. What comes out clearly in this view is the assumption that tied(p) firms from poor domestic environments can choose to go international and depart wan to internationalize even more especially if they are hardened in a country with poor institutional environment and weak capital markets.A second view is based on the fact that a better domestic environment in creases the attractiveness of assets to investors. The markets offer larger amounts of external financing, higher liquidity and lower cost of ca pital when the firms host country improves. Under this view, macroeconomics and institutional factors govern the relative willingness of domestic and international investors to supply financing to firms. Investors in international markets may however reward a better environment more than investors in domestic markets do.If thee be an access to the international markets, then better fundamentals will also be available hence it leas to more use of capital markets. Moreover, with liquidity agglomerating in one market, a adjoin of improved fundamentals and increased internalization may have nix effects on the domestic markets, providing international markets with greater advantage.For this reason, there are arguments for both the positive and negative impact on internationalization in those fundamentals that help to develop the local markets.ReferencesCollier, Hoeffler, and Pattilo, (1999) Determinants of Capital flight