FINANCIAL INNOVATIONS AS A POSSIBLE SOURCE OF ECONOMIC INSTABILITY

Journal Title: Knowledge International Journal - Year 2018, Vol 26, Issue 1

Abstract

The financial sector has developed more intensely in comparison with the real one in the period of globalization. Over the past twenty years, international cash flows have been more than thirty times more pronounced than the value of commodity exchange. With money moving across borders in almost uncontrolled amounts, the ability of national monetary authorities to control their own financial system has been significantly reduced. Financial globalization has allowed the realization of significant benefits to individual countries, to savers and investors. However, it radically transformed the market structure, made new risks and challenges for all market participants and creators of macroeconomic policies. In conditions of financial liberalization, potential investors are no longer confronted with numerous limitations of borrowing funds. Financial globalization has enabled participants in financial markets to choose different financial instruments in an effort to minimize potential risks. Numerous factors have contributed to the deregulation and globalization of the financial sector, among which are those distinguished by their significance: advancement of information technology, liberalization of national financial markets and competition between financial service providers. The development of information and communication technology has enabled market participant and monetary authorities to collect and process information that they need to measure, monitor and manage financial risks. Thanks to the developed range of new information technologies, it is possible to inform about prices and trade with numerous financial instruments, many of which are the result of deregulation and globalization of the financial sector. Liberalization of national financial markets in the combination with the strong improvements of information and communication technologies, on the one hand, and the globalization of national economies, on the other hand, accelerated financial innovation and induced international capital mobility. The globalization of financial mediation partially responded to the demand for mechanisms that mediate in trade of financial services and liberalized the rules for the entry of foreign financial institutions into domestic financial markets. The competition between the providers of intermediary financial services is a consequence of financial liberalization and technological innovations. In many countries, the authorities have mitigated regulations on institutions that have the right to deal with the provision of financial services through the regulatory mechanism, enabling the establishment of many, completely new forms of non-banking financial institutions. Investment banks, joint stock companies, mutual funds, insurance companies have begun to provide services that were once traditionally in the competence of banking institutions.

Authors and Affiliations

Slobodan Cvetanović, Sretko Ribać, Dušan Cvetanović

Keywords

Related Articles

THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH THE CASE STUDY OF THE REPUBLIC OF MACEDONIA

The inflow of foreign direct investment (FDI) is considered to be the main driving force of transition countries and an important driver of growth and technology transfer. Given that foreign firms are setting up product...

ORGANIZATIONAL LEARNING AND HUMAN RESOURCES DEVELOPMENT

In order for organizations and their human resources to survive in this constantly changing environment, they must adopt the philosophy of learning. Learning organizations have to create a culture of lifelong learning, e...

SUPPORT FOR THE DEVELOPMENT OF SOCIAL ENTREPRENEURSHIP IN BULGARIA

The social policy of a country is a set of specific activities aimed at regulating the social relations between different in their social status subjects. This approach to clarifying social policy is also called function...

RULES OF BEHAVIOR IN THE PROCESS OF COMMUNICATION QUI BENE, QUI PRODEST

The culture of behavior accompanies us throughout our lives, regardless of education, social situation, working environment. The basic principle of behavior should be: Respect the people around you, behave you as you wan...

CHECKLIST FOR THE IMPLEMENTATION OF THE RECOMMENDATIONS ON THE PREVENTION OF AGRESSION IN CHILDREN OF PRIMARY SCHOOL

Explaining the specifics of aggressive behavior in children from primary school age through a specific description of the aggressive outbursts of students; frequency of deviations in relationships with others; contextual...

Download PDF file
  • EP ID EP50066
  • DOI -
  • Views 291
  • Downloads 0

How To Cite

Slobodan Cvetanović, Sretko Ribać, Dušan Cvetanović (2018). FINANCIAL INNOVATIONS AS A POSSIBLE SOURCE OF ECONOMIC INSTABILITY. Knowledge International Journal, 26(1), -. https://europub.co.uk./articles/-A-50066