Lecture International business (9e): Chapter 12 - Charles W.L. Hill - Trường Đại học Công nghiệp Thực phẩm Tp. Hồ Chí Minh

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International Business

9e

By Charles W.L. Hill

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Chapter 12

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12­3

Why Do We Have 

Capital Markets?



_{Capital markets bring together investors and}

borrowers

<b>_investors</b>_{- corporations with surplus cash,}

individuals, and non-bank financial institutions

<b>_borrowers</b>_{- individuals, companies, and}

governments

<b>_{markets makers}</b>_{- the financial service companies}

that connect investors and borrowers, either directly
(investment banks) or indirectly (commercial banks)

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Who Are The Main Players 

in Capital Markets?

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12­5

What Makes The Global 

Capital Market Attractive?

 



_{Today’s capital markets are highly}

interconnected and facilitate the free flow of

money around the world



_{Borrowers benefit from the additional supply of}

funds global capital markets provide

_{lowers the}_{cost of capital}



_{Investors benefit from the wider range of}

investment opportunities

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How Have Global Capital 

Markets Changed Since 1990?



_{Global capital markets have grown rapidly}

_{the stock of cross-border bank loans was just $3,600}

billion in 1990, but $32,430 in 2010

_{the international bond market has grown from $3,515}

billion in 1997 to $26,613 in 2010

_{international equity offerings were just $18 billion in}

1990, but grew to $750 billion in 2009



_{The growth in the markets is a result of}

1.Advances in information technology

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12­7

What Are The Risks Of The 

Global Capital Markets?



_Question:

_{Could deregulation of capital markets}

and fewer controls on cross-border capital flows

make nations more vulnerable to the effects of

speculative capital flows?

_{can have a destabilizing effect on economies}
_{2008-2009 global financial crisis}



_{Speculative capital flows may be the result of}

inaccurate information about investment

opportunities

_{if global capital markets continue to grow, better}

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