THE ROLE OF INTERNATIONAL FINANCIAL CENTERS IN THE GLOBAL ECONOMY
DOI:
https://doi.org/10.55640/Keywords:
International financial centers; global economy; financial globalization; capital flows; financial markets.Abstract
International financial centers (IFCs) play a pivotal role in the contemporary global economy by enabling cross-border capital movements, facilitating international investment, and fostering the integration of financial markets across countries. As financial globalization deepens and national economies become increasingly interconnected, the significance of international financial centers has grown considerably. Today, they function not only as hubs of financial transactions but also as major engines of global financial development and economic progress. This paper analyzes the role of international financial centers within the global economic system and assesses their impact on economic growth, financial integration, and the mobility of international capital.
The study employs a theoretical and analytical framework based on a review of international finance literature, the examination of global financial indicators, and a comparative assessment of major international financial centers. Particular attention is given to the fundamental functions performed by IFCs, such as financial intermediation, risk diversification, and the delivery of sophisticated financial services. In addition, the research evaluates the institutional environment and regulatory conditions that shape the international competitiveness of financial centers.
The results demonstrate that advanced international financial centers contribute to greater efficiency in global financial markets, expand access to financial resources, and support the growth of international trade and cross-border investment. However, the concentration of financial activities in a limited number of leading global financial centers may also amplify systemic vulnerabilities and heighten the risk of financial instability, especially during periods of global economic turbulence. The paper concludes that enhancing regulatory mechanisms, improving institutional quality, and strengthening international financial cooperation are crucial for maximizing the benefits of international financial centers while mitigating potential risks. The findings enrich the existing literature on international finance and offer practical insights for policymakers involved in global financial system development.
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