Financial globalization: a macroeconomic angle

Purpose - The objective of this paper is to provide a macroeconomic assessment of the impact of global financial integration over the economies that are undergoing financial integration. Design/methodology/approach - The paper focuses on several issues. It begins with examining the evidence whether financial globalization elevates growth performance of the integrating economy and supports it macroeconomic stability. It takes a nuanced view and divides the impact of financial integration into direct and indirect benefits. Second, it scrutinizes whether there are some threshold conditions, that is, in their presence and with their support, financial globalization underpins growth and stability of the capital importing economy and in their absence it cannot. Third, it delves into the oft-cited allegation of financial globalization being a source of macroeconomic volatility and eventually financial crises. Fourth, as the evidence that emerged regarding ability of financial globalization to underpin growth was unambiguous. Policy mandarins' options are examined. Findings - The paper finds that from a theoretical perspective, it is easy to state that integration of financial markets an potentially faster growth. Whether it happens in reality is a different matter. Originality/value - The paper explores a new theme. While there are many relevant themes in financial globalization, the author has not seen any article on this theme and this paper may well be the first.