The advantages of Globalization of finance are the reduction of financial risk, improve the allocation of capitals, and reduce borrowing cost. Every business small or large has some form of a financial risk. The reduction of financial risk may require a business to plan for potential risk and existing risk. A company needs to plan ahead for future difficulties seen or unforeseen. Improving the allocation of capitals is one of the most important decisions associated with a company’s success and sustainability. These decisions are basically aim at creating value for the stakeholder and impact the performance of most companies. For any business, it is very important to borrow what is needed to help with the reduction of borrowed cost. Shop around and pay down the debt quickly to reduce unnecessary expenses.
The Disadvantages of globalization of finance are emerging countries and banks that are weak due to fewer regulations, volatility and the perverted allocation of capital flows, and the instability of the markets. Having a financial crisis will result in the change or reversal of capital flows and will influence the international financial system. The volatility and perverted allocations of capital flow will make it difficult to measure risk and identify the potential and existing risk. Instability of the markets related to globalization of finance will cause threats to the markets and make them very unstable.
Contribution to Global Financial Crisis In 2008…