Thanks to deregulation & technological advances, Financial Markets are all interlinked. Funds can thus be raised overseas, not only domestically.
Deregulation is the process by which rules and regulations are removed or reduced in order to make markets increasingly efficient. The rationale behind this is that deregulation will promote competitiveness, and therefore result in lower prices and a more efficient marketplace.
To realise the effect of deregulation and technological advances on financial markets, we first have to understand what financial markets are. Basically, a financial market is a mechanism that allows people to buy and sell financial securities, commodities and other fungible items of low value at low transaction costs and at prices that reflect the efficient market hypothesis . Deregulation and technological advances go hand-in-hand; as deregulation became increasingly common, technology was also quickly advancing to become what it is today.
One highly regulated financial market before the 1980s was Japan. However, due to an agreement between the US and Japan in 1984 to liberalise Japanese financial markets, the rapid deregulation helped to strengthen the Japanese Yen and in turn helped to sustain capital flows to the US market and prevented an unwarranted weakening of the US dollar. Another huge instance of deregulation was the introduction of the Euro on 1 January 1999. The capital market was given a massive boost by reducing the costs and risk of transferring money between the European countries that adopted the currency.
With technological advances and the increasing use of the Internet, financial information on foreign investments and markets is accessible at the touch of a few keys. Financial data co ...