Abstract
This paper/chapter empirically examines the reaction of international financial markets and financial capital flows across many developing and emerging market economies, with a particular focus on the dynamics of capital flows across emerging market economies. Using daily data from (2000 to 2020) and controlling for a range of local and global macroeconomic and financial factors and global financial crisis, we use a fixed-effects panel approach quantitative and descriptive approach combined to show that emerging markets have been affected more than advanced economies. In particular, emerging economies in Asia and Europe have experienced the strongest impact on stocks, bonds and exchange rates in recent times, as well as sudden and large capital inflows. Our findings suggest that very large fiscal stimulus packages, as well as quantitative easing by central banks, helped restore overall investor confidence by lowering bond yields and boosting stock prices. Our findings also highlight the role that global factors and developments in the world’s leading financial centers play in financial conditions in emerging markets and developing countries. More importantly, the impact of quantitative easing measures related to the global financial crisis by central banks in developed countries.
Highlights
International financial markets and emerging markets, financial capital flows play an important role in the economies of developing and developed countries alike, as they are one of the financial policy tools used to mobilize domestic savings and an attractive tool for foreign investments, in addition to their active role in financing economic development plans
The most important financial markets and financial capital flows known to economic history in Europe, and in the world - and in which they were dealt with bills of exchange, promissory notes, and precious metals are the markets of Venice and Genoa in Italy and the Frankfurt market, and these markets were among the most important European financial markets dealing with the Middle East, which witnessed in that period a huge commercial activity as a center of communication between the far East and Europe
Regarding a comparative analysis of the effects of the crisis on Arab economies according to the three groups mentioned, the extension of the crisis is attributed to two main things, the first of which is financial factors related to the degree of exposure of the banking and financial sector in the economy to global financial markets, and the second is the commercial factors that are related to the main trading partners of Arab countries [11]
Summary
International financial markets and emerging markets, financial capital flows play an important role in the economies of developing and developed countries alike, as they are one of the financial policy tools used to mobilize domestic savings and an attractive tool for foreign investments, in addition to their active role in financing economic development plans. The book develops theoretical analysis to deepen our understanding of how capital flows, banking systems and financial markets are linked with each other and provides constructive policy implications by overcoming the empirical challenges [5]. Until the (1970s) international financial markets were regulated politically by the Bretton Woods system, which at its core promoted stable rates of exchange between important currencies and the control of capital transactions. This system provided a relatively stable general framework for the world economy, as well as considerable growth [12]. Proportions between the real economy and financial systems became inverted, which led to the economic dominance of the financial markets, creating the trigger, Centre and motor for the present wave of globalization [12, 13]
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