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Implications of Cross-Border Bank Activity for Trade and Capital Flows

In: Business and Management

Submitted By zsahatqija
Words 1158
Pages 5
Today, more than ever before, companies and even retail customers are focusing on diversifying their portfolios and expanding their businesses across countries and currencies, to ensure a safe position in the international market. The biasness towards the home market has been declining over the years and moving forward to an internationalized economy and a global flow of capital. Hence, more multinational companies are arising because capital is more mobile and liquid than labor. Of course, cheap labor and easy extracted raw material are among the main attractive forces behind external investment and cross border capital flow.
Consequently, global financial activities are growing rapidly due to many factors, among which:
- Growth of the investor portfolios, international hedge funds and bonds, private accounts and monetary source diversification;
- Financial market liberalization and highly improved free flow of information;
- Technological developments and advances in international communication across borders for easier and faster access in databases and markets;
- Increased spending from and in the emerging countries.
The bank activities and capital flows are various and include processes and tools that compose the major investment instruments, debt and loan portfolio, cash flow, FOREX fluctuations, cross border loans and deposits, and international transfers.
Foreign assets of emerging economies
Foreign capital injection into the emerging economies has triggered an international mindset in the developing economics and a growth oriented business environment even in the weakest economies. Through international assistance and increased fund allocation to these economies, the local businesses have taken advantage of these opportunities and increased their profits. Faced with macroeconomic burdens and volatile currency exchange rates, many emerging economies

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