Assessing the impact of globalization on financial stability: Evidence from selected developed and developing countries
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Author(s)Raafat Abou SaadLink to ORCID Index: https://orcid.org/0009-0009-6286-8925
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Judit SágiLink to ORCID Index: https://orcid.org/0000-0003-4197-3530
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DOIhttp://dx.doi.org/10.21511/imfi.22(2).2025.31
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Article InfoVolume 22 2025, Issue #2, pp. 397-410
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14 Downloads
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Creative Commons Attribution 4.0 International License
Globalization and financial instability are interconnected phenomena influencing the modern economic and financial environment. Thus, this study analyzes the global antecedents of the current financial problems and looks at the effects of globalized markets on the previous financial crisis of 2007–2008. It quantitatively examines the impact of globalization on financial stability across 15 chosen countries of different continents between 2001 and 2022, focusing on four variables: trade openness, foreign direct investment and net inflows (FDI), inflation and consumer prices, and official exchange rates. Using a comparative analysis approach, the study evaluated these factors to find their influence on one another for the selected developed and developing economies. The findings reveal the varying impacts of globalization on financial stability across nations. Developed economies such as Austria, Australia, and Belgium show a strong positive correlation between financial instability and trade openness, FDI inflows, stable inflation rates, and consistent exchange rates. In contrast, developing countries such as Angola, Argentina, Benin, and Burundi face financial instability associated with volatile FDI flows, major trade fluctuations, high inflation rates, and currency volatility. This highlights that international effects from globalization show different patterns since countries have varying institutional capacities and regulatory systems. Hence, understanding the relationship between globalization and financial instability provides valuable insights and guidance for policymakers to implement stabilization measures through regulatory frameworks and monetary policies and balance economic and financial integration.
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JEL Classification (Paper profile tab)F62, G01, F65, E44
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References42
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Tables3
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Figures8
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- Figure 1. Trade openness in % of GDP for the 15 countries for the last 22 years
- Figure 2. Trade openness correlation coefficients
- Figure 3. FDI & net inflows for the 15 countries for the last 22 years
- Figure 4. Correlation coefficients of FDI for countries respectively
- Figure 5. Inflation and consumer prices for the 15 countries for the last 22 years
- Figure 6. Correlation coefficients of inflation and consumer prices for countries respectively
- Figure 7. Official exchange rates’ movements for the 15 countries for the last 22 years
- Figure 8. Correlation coefficients of official exchange rate fluctuations for countries respectively
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- Table 1. Classification of countries by continent and development level
- Table 2. Globalization and financial stability variables employed in the study
- Table 3. Summary results of the proposed hypotheses
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Dalia Perkumiene ,
Agbonmere Osamede ,
Regina Andriukaitienė ,
Olegas Beriozovas
doi: http://dx.doi.org/10.21511/ppm.19(4).2021.37
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Sergii Sardak ,
Maxim Korneyev ,
Vladimir Dzhyndzhoian ,
Tatyana Fedotova ,
Olha Tryfonova
doi: http://dx.doi.org/10.21511/ppm.16(1).2018.05
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