Smaller but Safer?

Global trends taken for granted in recent decades, the big expansion in global financial assets compared with underlying economic activity, growing global financial integration, shrinking role of the state in financial systems, and rising share of cross-border ownership of financial institutions, may reverse over the foreseeable future. In addition, the structure of financial systems, particularly in developed countries, will likely become oriented less toward capital markets and more toward traditional (and simpler) banking activities. The impact on economic growth and overall welfare is likely to be negative, perhaps the price author have to pay for living in a brave new (and presumably safer) financial world.

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Bibliographic Details
Main Author: Stephanou, Constantinos
Language:English
Published: World Bank, Washington, DC 2009-06
Subjects:ARBITRAGE, ASSET PRICES, BALANCE SHEETS, BANK ASSETS, BANK CONSOLIDATION, BANK DEPOSITS, BANK FOR INTERNATIONAL SETTLEMENTS, BANK LENDING, BANK NATIONALIZATIONS, BANK REGULATION, BANKING SYSTEM, BOND, BOND MARKET, BOND MARKET CAPITALIZATION, BORROWING, CAPITAL ADEQUACY, CAPITAL CONTROLS, CAPITAL FLOWS, CAPITAL MARKET, CAPITAL MARKET DEVELOPMENT, CAPITAL MARKETS, CENTRAL CLEARINGHOUSES, COMMERCIAL LENDING, CONTRIBUTION, CREDIT DEFAULT, CREDIT DEFAULT SWAPS, CREDIT DERIVATIVES, CREDIT LINES, CREDIT RISK, CRISIS COUNTRIES, CROSS-BORDER CAPITAL, DEBT SECURITIES, DEPOSIT, DEPOSIT MONEY BANK, DERIVATIVES MARKET, DIRECTED CREDIT, DOMESTIC INSTITUTIONAL INVESTOR, ECONOMIC ACTIVITY, ECONOMIC CHARACTERISTICS, ECONOMIC GROWTH, ECONOMIC INTEGRATION, ECONOMIC SYSTEMS, EMERGING ECONOMIES, EMERGING MARKET, EMERGING-MARKET, EMPLOYMENT, EQUITIES, EQUITY SECURITIES, EXPOSURES, FINANCE COMPANIES, FINANCIAL AFFAIRS, FINANCIAL ASSETS, FINANCIAL CRISIS, FINANCIAL DEPTH, FINANCIAL DEREGULATION, FINANCIAL DEVELOPMENT, FINANCIAL ECONOMIST, FINANCIAL GLOBALIZATION, FINANCIAL INDUSTRY, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIARIES, FINANCIAL LIBERALIZATION, FINANCIAL MARKET, FINANCIAL REFORMS, FINANCIAL REGULATION, FINANCIAL RISK, FINANCIAL RISKS, FINANCIAL SECTOR, FINANCIAL SECTOR POLICY, FINANCIAL SERVICES, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FOREIGN ASSETS, FOREIGN BANKS, FOREIGN ENTRY, FOREIGN INVESTORS, FOREIGN OWNERSHIP, FOREIGN OWNERSHIP OF BANKS, FUTURE GROWTH, GLOBAL DEVELOPMENT FINANCE, GLOBAL FINANCIAL SYSTEM, GLOBAL TRADE, GLOBALIZATION, GROWTH OF MULTINATIONAL, GUARANTEE SCHEMES, GUARANTY, HEDGE FUNDS, HOME COUNTRIES, HOST COUNTRIES, HOUSEHOLDS, HUMAN CAPITAL, INCOME, INCOME FLOWS, INCOME GROUP, INCOME SOURCE, INCOME SOURCES, INCOMES, INFORMATION SERVICES, INFORMATION TECHNOLOGY, INSTITUTIONAL INVESTORS, INSURANCE, INSURERS, INTEREST RATES, INTERNATIONAL BANKING, INTERNATIONAL FINANCIAL STATISTICS, INTERNATIONAL SETTLEMENTS, INVESTMENT BANKING, INVESTMENT BANKS, INVESTMENT COMPANY, INVESTMENT PRODUCTS, INVESTMENT RETURNS, INVESTOR BASE, INVESTOR BASES, ISSUANCE, LENDERS, LEVEL PLAYING FIELD, LIABILITY, LIFE INSURANCE, LIFE INSURANCE COMPANIES, LIQUIDITY, LOCAL CAPITAL MARKETS, LOCAL MARKETS, MANDATES, MARKET INSTRUMENTS, MARKET INVESTMENTS, MARKET MECHANISMS, MARKET PRICES, MIDDLE-INCOME COUNTRIES, MONETARY FUND, MORTGAGE, MORTGAGE LENDERS, MORTGAGE MARKET, MUTUAL FUNDS, NATIONALIZED BANKS, NEW BUSINESS, NONBANK FINANCIAL INSTITUTIONS, OUTSTANDING STOCK, PENSION, PENSION FUND, PENSION FUND ADMINISTRATORS, PENSION SYSTEMS, PENSIONS, POLICY RESPONSES, PORTFOLIOS, PORTFOLIOS OF PENSION FUNDS, PRIVATE BOND, PRIVATE DEBT, PRIVATE ENTITIES, PRIVATE PENSION, PRIVATE PENSION FUNDS, PRIVATE SECTOR DEVELOPMENT, PROFITABILITY, PRUDENTIAL REQUIREMENTS, PUBLIC DEBT, PUBLIC DEBT SECURITIES, PUBLIC POLICY, REAL SECTOR, RECESSION, RESEARCH ASSISTANCE, RESOURCE ALLOCATION, RETIREMENT, RETIREMENT SAVINGS, RETURN, RETURNS, RISK AVERSION, SECONDARY MORTGAGE, SECONDARY MORTGAGE MARKET, SENIOR, SINGLE MARKET, SOLVENCY, STOCK MARKET, STOCK MARKET CAPITALIZATION, STOCK MARKET CAPITALIZATIONS, SUBSIDIARIES, TRADING, TRADING ACTIVITIES, TRANSITION ECONOMIES, UNDERWRITING CREDIT RISK, UNIVERSAL BANKS, VALUABLE, WAGE, WAGES, WORLD DEVELOPMENT INDICATORS,
Online Access:http://documents.worldbank.org/curated/en/2009/06/10849207/smaller-safer
https://hdl.handle.net/10986/10247
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Summary:Global trends taken for granted in recent decades, the big expansion in global financial assets compared with underlying economic activity, growing global financial integration, shrinking role of the state in financial systems, and rising share of cross-border ownership of financial institutions, may reverse over the foreseeable future. In addition, the structure of financial systems, particularly in developed countries, will likely become oriented less toward capital markets and more toward traditional (and simpler) banking activities. The impact on economic growth and overall welfare is likely to be negative, perhaps the price author have to pay for living in a brave new (and presumably safer) financial world.