Globalization of Financial Markets & American Banks

Globalization of business activity has been closely followed by an increasing globalization of financial markets (Ferling, 1993, pp. 61-62). The increasing globalization of business activities by American companies has increased the requirements of these firms for the availability of a wide variety of financial services in an equally wide variety of geographical locations around the world (Love, 1994, pp. 32-33). These corporate demands have placed American banks in a position wherein they must be able to provide financial services on a global scale or lose valuable customers (Rogers, 1994, pp. 4246).

Technology is facilitating the globalization of financial services, while investment banking is providing the principal venue for these changes (Bryan, 1993, pp. 59-71; Mullin, 1993, pp. 54-83). These two phenomenon are explored in greater detail in the discussions that follow.

Computer technology was introduced into the financial markets initially to perform number crunching activities associated primarily with recording and reporting market operations. These initial applications were valuable, and continue to be valuable. The introduction of new technology is one of the means by which productivity may be increased (Wright, 1989, pp. 65-69). New technology tends to lower production costs and increase profitability over the long-term, and is, thus, indispensable in the

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participate in the stock market will increase over the coming 10 years. In London, the raucous floor trading activity associated with stock market operations has largely disappeared. Almost all London trading now occurs in relatively quiet offices far removed from the stock exchange, where the activity is conducted by traders sitting at computer terminals. Over the coming 10 years, a similar transformation will likely occur in American stock exchanges (Welles, 1990, p. 74). Globalization of Financial Activity An increasing number of investors--from all countries--are focusing on global markets (Glasgall, Holyoke, Rossant, and Javetski, 1993, pp. 120-126). As investment horizons broaden, the assessment of financial markets must be transformed from a national to an international perspective. one major development over the past year with respect to the equity stock market and the bond in the United States has been the shift of portfolio holdings out of the United States and into foreign markets (Out of America, 1993, p. 90). Over the past year, major investment houses have reduced the proportion of American holdings in their equity stock portfolios from an average of 50 percent to an average of 37 percent. At the same time,
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Approximate Word count = 2081
Approximate Pages = 8 (250 words per page)

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