Within an economy, financial markets exist in order to bring together savings-deficit and savings-surplus units. The international capital markets perform the same function between economies and can be thought of as extending the benefits provided by such markets on a national scale. At least in principle unrestricted capital flows promise advantages to the world economy comparable to those obtained as a result of free trade. However, the simultaneous proliferation of exchange controls and easing of barriers to trade suggests that this may not be so.
KeywordsCapital Market Financial Asset Financial Intermediary Capital Asset Price Model Asset Price Model
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- 1.B. J. Moore, An Introduction to the Theory of Finance (New York: The Free Press, 1968) p. 95.Google Scholar