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Öz

Altough there is no single definition that everybody agrees with, globalization especially after the 1990s, has become a subject which has attracted great attention. Today, the world appears as if it is a single uniform economy. The effects of globalization on financial markets have been especially powerful. In this study, both the definition of globalization and its effects on financial markets are investigated. Due to the effects of technological developments financial markets have become globalized and functioned as if they are branches of a single financial market. The reduction of regulations, an important factor that has helped create financial globalization, has made these markets vulnerable to crises. The integration of markets have created a global dimension to crises.

Anahtar Kelimeler

• Globalization, Financial Globalization, Financial Markets, Crisis.

KÜRESELLEŞME, FİNANSAL PİYASALAR VE KRİZ

Öz

 

ÖZET

Üzerinde herkesin anlaştığı bir tanımı olmamakla birlikte, küreselleşme, özellikle 1990’lardan sonra çokça konuşulan bir konudur. Dünya bugün adeta tek bir ekonomiye sahip gibidir. Özellikle finans piyasaları üzerinde küreselleşmenin etkisi çok derin olmuştur. Bu çalışmada küreselleşmenin tanımı yanında finans piyasaları üzerindeki etkisi ele alınmaktadır. Teknolojik gelişmelerin de etkisiyle finans piyasaları küreselleşmiş, adeta tek bir finans piyasasının şubeleri gibi faaliyet göstermeye başlamıştır. Finansal küreselleşmeyi doğuran diğer önemli olgu olan düzenlemelerin azaltılması bu piyasaları krize açık hale getirmiştir. Piyasalar arasındaki entegrasyon da krizlerin küresel çapta ortaya çıkmasına sebep olmuştur.

     Anahtar Kelimeler: Küreselleşme, Finansal Küreselleşme, Finansal Piyasalar, Kriz.

     JEL: E32, E44, F65

GLOBALIZATION, FINANCIAL MARKETS AND CRISIS

ABSTRACT

 

Altough there is no single definition that everybody agrees with, globalization especially after the 1990s, has become a subject which has attracted great attention. Today, the world appears as if it is a single uniform economy. The effects of globalization on financial markets have been especially powerful. In this study, both the definition of globalization and its effects on financial markets are investigated. Due to the effects of technological developments financial markets have become globalized and functioned as if they are branches of a single financial market. The reduction of regulations, an important factor that has helped create financial globalization, has made these markets vulnerable to crises. The integration of markets have created a global dimension to crises.

 

Key Words: Globalization, Financial Globalization, Financial Markets, Crisis.

JEL: E32, E44, F65

Anahtar Kelimeler

• Küreselleşme, Finansal Küreselleşme, Finansal Piyasalar, Kriz.

Kaynakça

1. Adams, F. Gerard. (2009), “The New Financial Crisis: New Economy, Globalisation and Old-Fashioned Philosophy”, World Economics, Vol. 10, No. 1, January-March.
2. Ceylan, Cengiz vd. (2011), Küreselleşmenin Sektörel Etkileri, İTO, Yayın No. 2010-98, İstanbul.
3. Das, Dilip K. (2006), “Globalization in the World of Finance: An Analytical History”, Global Economy Journal, Vol.6, Issue: 1.
4. Dore, Ronald. (2008), “Financialization of the Global Economy” Industrial and Corporate Change, Vol.17, No.6, 1097-1112.
5. Goldberg, Linda S. (2008), Understanding Banking Sector Globalization , http://app.ny.frb.org/research/economists/goldberg/lgimfstaff07282008.pdf
6. Held, David et al. (1999), Global Transformations: Politics, Economics and Culture. UK: Polity Press.
7. HM Tresury. (2008), Embracing Financial Globalisation. http://www.hmtreasury.gov.uk/d/embracing_financial_globalisation300508.pdf.
8. Kumagai, Junichi. (2005), Structural Changes and key Issues in the Globalization of Financial Markets. NLI Research, http://www.nliresearch.co.jp/english/economics/2005/eco050307.pdf.

9. Leijonhufvud, Christina. (2007), “Financial Globalisation and Emerging Markets Volatility”, The World Economy, Vol.30, No.12, December, 1817-1842.
10. Nayyar, Deepak. (2006), Globalisation, History and Development: A Tale of Two Centuries, “Cambridge Journal of Economics”, 30, 137-159.
11. Reinhart, Carmen M. and Rogoff, Kenneth S. (2008), Banking Crises: An Equal
12. Opportunity Menace, NBER working Papers. http://www.nber.org/papers/w14587.pdf
13. Rybiński, Krzysztof. (2006), “Globalization Versus Financial Markets”. BIS. http://www.bis.org/review/r060705d.pdf.
14. Stiglitz, Joseph E. (2002), Küreselleşme: Büyük Hayal Kırıklığı, Ter. Arzu Taşçıoğlu & deniz Vural, İstanbul: Plan B.
15. Wheeler, Graeme (2008), “Financial Market Cycles, Globalization, and the Current banking Crisis”, World Bank. worldbank.org/html/extdr/.../pdf/fin_market_cycles-gw.pdf EXTENSIVE SUMMARY
16. Although globalization is a multidimensional phenomenon it is its economic dimension that comes to the fore. Financial globalization is highly relevant as it leads to important outcomes in terms of the world economy. Many factors do play a general role in financial globalization, but the decline of the Bretton Woods system in the early 1970s is accepted as a milestone. Increasing capital flows lead to the collapse of the fixed exchange rate system and following this accelerated further the increase in capital flows. Thus, financial markets began to integrate with each other.
17. Remarkable developments in the information and telecommunication technologies determined how these changes coming into being. As a result of technologic progress in these areas, capital flows reached extraordinary heights and gained velocity so that it became impossible to control them. Another factor which played an important role in financial globalization coming into the picture and gaining speed was the deregulation of financial markets. Moreover, the spread of privatizations, mergers and acquisitions as well as the increase in cross-border investments also supported such developments. Financial globalization in the modern era - which came into being after the 1970s - has three important features. Firstly, the volatility of capital flows (specifically capital inflows in emerging economies) secondly, the frequency of financial crises and finally, the fact that less capital flows go to poor countries with that capital circulating among richer countries. Another important outcome of financial globalization is the increases in the share of the financial sector in GDP compared to the share of the real sector. This development which is identified as ‘financialization’ plays an important role in the emergence of speculative bubbles, hence the occurrence of crises.
18. It is asserted that the openness of economies (especially in terms of capital movements) and financial integration have been the main causes of the global crisis since the 1990s. In addition to increasing capital flows, another vital feature of financial globalization (which is important in terms of economic crisis) is for aggregate debts in the economy to ascend. The value of financial debts and assets begin to exceed GDP. Meanwhile, alongside company debts, debts and therefore, risks to households are heightened.
19. Another important factor playing a role in globalization speeding up in the 1990s was the deregulation of markets. Additionally, with the spread of privatizations, mergers and acquisitions, cross-border investments promptly increased. If there was a glut of savings in one country this could find an investment area in another country. In these years, gluts of savings in different parts of the world poured into the U.S. which had an external deficit. This liquidity in the U.S. played a substantial role in the development of derivative markets.
20. As a result of these developments, in the era of financial globalization the frequency and depth of the banking crisis increased. Crises arose in various countries simultaneously. Oligopolistic financial institutions and globally integrated financial markets lead to an increase in contagion effects and systemic risk. As risks were increasing, uncontrolled financial institutions began to take more risks resting upon their market position, popularly expressed by the term “too big to fail”. In other words, they were expecting to be bailed out by the economic authorities. This situation resulted in the idea that markets should be regulated more. As was demonstrated by the 2008 crisis, a global regulatory authority is very much required.