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Chapter 20 (9)
Financial Globalization: Opportunity and Crisis
◼ Chapter Organization
The International Capital Market and the Gains from Trade
Three Types of Gains from Trade
Risk Aversion
Portfolio Diversification as a Motive for International Asset Trade
The Menu of International Assets: Debt versus Equity
International Banking and the International Capital Market
The Structure of the International Capital Market
Offshore Banking and Offshore Currency Trading
The Shadow Banking System
Banking and Financial Fragility
The Problem of Bank Failure
Government Safeguards against Financial Instability
Moral Hazard and the Problem of “Too Big to Fail”
Box: The Simple Algebra of Moral Hazard
The Challenge of Regulating International Banking
The Financial Trilemma
International Regulatory Cooperation through 2007
Case Study: The Global Financial Crisis of 2007–2009
Box: Foreign Exchange Instability and Central Bank Swap Lines
International Regulatory Initiatives after the Global Financial Crisis
How Well Have International Financial Markets Allocated Capital and Risk?
The Extent of International Portfolio Diversification
The Extent of Intertemporal Trade
Onshore-Offshore Interest Differentials
The Efficiency of the Foreign Exchange Market
Summary
© 2015 Pearson Education, Inc.
