The paper "Will There Be Another Financial Crisis in the Future" is a good example of finance and accounting coursework. As a result of the great depression that began in 1929 in the USA, there was a collapse in the global financial markets which brought about the significant economic downturn and severe social consequences related to a higher number of unemployed people. This study examines the important factors driving the globalisation of the international financial market. It also examines the policy used and the structural and management issues that create an environment that is conducive to the evolving financial crisis.
The underlying issues that result in the failure of several crises are also examined such as the failure of Baring Bank, the Asian Financial crisis and the global financial crisis. According to Held et al. (1999), globalisation can be described as a way of spreading communication, production and technological processes across the globe. This spread is facilitated by several economic and cultures activities. Globalisation can also be referred to as the effort used by international financial markets such as IMF and World Bank in promoting a free market where goods and services are exchanged.
IMF was introduced in 1944 and it helps in encouraging international cooperation and dealings in money matters. It also enhances stability in various exchange rates thus creating a payment system that is employed internationally. The Baring Bank for example, which collapsed in 1995, was due to losses made by an employee. This was the oldest merchant bank in London but the Bank reported losses due to market shifts. Factors that drive globalization The liberalisation of capital markets There are forces that encourage and drive globalization thus increased momentum of globalization since the early 1980s.
June (2008) argues that it is necessary since it encourages the borderless business world as a result of the Global Agreement on Trade and Tariff (GATT) which encourages extensive liberalisation. The global trend can also be described using liberalisation, privatisation and globalisation (LPG). This represents the mutual interdependence among various forces in the global market. Liberalisation has also led to increased mergers and acquisitions across borders and also the introduction of other foreign direct investment. Liberalization has also led to an increase in multinational enterprises that become successful once they link their resources to their objectives in the global market.
Multinational companies also benefit from liberalization by linking their strengths to opportunities that come with globalization. Increased technology According to Stanley (2008), the other factor that drives globalization is technology. Globalisation trends have been facilitated by improved technology. This is because it increases the economies of scale thus enabling the market result to breakeven. Technology has evolved through various fields for example in the transport sector the development of air cargo has resulted in great momentum for globalization.
This is due to reduced barriers such as distance. Effective methods of transport have also been introduced as a result of improved technology, for example, air cargo that transport of perishable and fragile goods. In the communication sector, technology has improved globalization for example since the introduction of the worldwide web where many investor purchase goods through the internet. Improved technology has reduced the cost of developing new products, which has been huge in certain businesses for example in pharmaceuticals.
The global market has reduced these huge costs in connection to the fast changes in technology that reduce obsolescence as well as reducing the payback period. Globalisation also requires huge investment and diverse skills and this can be achieved through carrying out research and development which enhance new product development.
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