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Governing the Modern CorporationCapital Markets, Corporate Control, and Economic Performance$
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Roy C. Smith and Ingo Walter

Print publication date: 2006

Print ISBN-13: 9780195171679

Published to Oxford Scholarship Online: September 2006

DOI: 10.1093/0195171675.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 12 November 2019

The New Financial Markets

The New Financial Markets

Chapter:
(p.23) 2 The New Financial Markets
Source:
Governing the Modern Corporation
Author(s):

Roy C. Smith (Contributor Webpage)

Ingo Walter (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/0195171675.003.0002

This chapter examines the fundamental effects related to the evolving dominance of capital markets. By the end of the 20th century, the proportion of all financial assets held by banks had declined to approximately 30% from 45% in 1980, with the difference transferred to global financial markets that had developed to an extraordinary, completely unprecedented size with market capitalization of stocks and bonds exceeding $72 trillion in 2000. These markets contained powerful forces that could quickly move funds in large quantities around the world to jump into (or out of) a suddenly discovered investment opportunity. These forces were energized by enormous turnover volumes — the value of consolidated world stock trading in 2000 was more than $47 trillion, one and a half times its market capitalization. About half of this trading occurred outside the United States, in stock markets in Europe, Asia, and Latin America.

Keywords:   global financial markets, capital markets, economic policy, mergers, restructuring, technology, financial services, deregulation

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