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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
How has financial market integration affected interest rate movements? “Financial market integration has increased the speed with which interest rate changes and volatility are transmitted among countries” (Saunders & Cornett, 2008, p.206). Countries have to compete with one another for foreign investment money, so when one country is offering more return than another, investors are likely to move money to that country, which in turn causes other country’s interest rates to rise to compete, and vice versa for borrowers. This means interest rates are likely moving in the same direction among different countries at any given time. “The level and volatility of interest rates and the increase in worldwide financial market integration has caused the Bank of International Settlements to require depository institutions to have interest rate risk measurement systems that assess the effects of interest rate changes on both earnings and economic value” (Saunders & Cornett, 2008, p.206-207).
Tim
Reference
Saunders, A. & Cornett, M. (2008). Financial Institutions Management: A Risk Management
Approach. 7thEdition. McGraw-Hill-Irwin.
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