The driving forces of financial globalization have led to four dramatic changes in the structure of national and international capital markets.
•First, banking systems have been under a process of disintermediation. Financial intermediation is happening more through tradable securities and not through bank loans and deposits.
•Second, cross-border financing has increased. Investors are now trying to enhance their returns by diversifying their portfolios internationally. They are now seeking the best investment opportunities from around the world.
•Third, the non-banking financial institutions are competing with banks in national and international markets, decreasing the prices of financial instruments. They are taking advantage of economies of scale.
•Fourth, banks have accessed a market beyond their traditional businesses. It has enabled the banks to diversify their sources of income and the risks.