Question

What have been the major factors contributing to growth in the foreign financial markets?

Answer 1

Factors contributing to the growth of foreign financial markets are as follows:

1. Liberalization of the financial activities: Deregulation of the financial activities leads to free flow of capital and thereby help in proper allocation of funds. Due to liberalisation of financial policies suppliers are able to meet the users of the funds with its effective utilisation.
2. Macroeconomic environment: Macro economic factors promote foreign financial market. Such factors are trade and tax policies prevailing in that country. If the policies are liberal, it will attract more investors which will positively influence the foreign exchange market.
3. Technological advancement: Technological innovations are the major contributor to the growth of foreign financial market. Information Technology advancement has speed the availability and dissemination of the information. Electronic trading made an ease to cross border transactions. Thus, it promotes foreign financial and economic growth.