Globalization, Gating, and Risk Finance

1Globalization: Economies in Collision

Motivation

This chapter provides an overview of globalization. Our intent is to motivate and stimulate the reader to the compound challenges, opportunities, and risks that global finance provides. The economic and financial interdependence that geopolitics, macroeconomics, and finance entail has contributed to both global growth and concerns. Globalization has ushered in a transformation of economics and finance not only by encouraging the freedom to trade, but also through the movement of capital, resources, and money, as well as the migration of people and technology. It has led to major changes in financial institutions and in the practice of finance. This chapter seeks to highlight some of these issues as well as to present a number of trends that demonstrate the evolution of global finance and its current challenges. We provide a list of references for the motivated reader to better appreciate the impact of globalization on finance.

1.1 Introduction

Global finance is derived from and defined by countries’ macroeconomic factors, trade, political, geopolitical and social agendas, and the global pursuit of national and individual financial interests. Sovereign states, corporate firms (both national and international), as well as a multitude of investors, traders, intermediaries, networked financial agencies, and globally distributed regulators are the elements that make up global finance; the extraordinary complexity that comprises ...