Global economic integration is not a new phenomenon and has been taking place to some degree since ancient times. "Since the travels of Marco Polo seven centuries ago, global economic integration- through trade, factor movements, and communication of economically useful knowledge and technology- has been on a generally rising trend" (Mussa, 2000, p. 1). The financial industry is a very large part of these economic changes and will continue to play an important role into the twenty second century and beyond. The future changes of the financial market and how they impact stakeholders' relationships with organizations will be explored and discussed in this paper. The pace of economic globalization is projected to continue to expand and is greater today than it ever has been, so the role of financial institutions will continue to be of paramount importance in sustaining this growth (Mussa, 2000, p. 1).
Roles of Financial Institutions in the Global Economy
Countries must keep pushing ahead to continuously improve their competitiveness to create new business value within the financial services industry.
Firms' operating environments are changing significantly. For example, competition from emerging economies has intensified, and rapid progress in IT has reduced the life span of existing competitive strengths by lowering the barriers of time and geography. Japanese businesses have been making great efforts to survive this tidal wave of structural change. Their performance depends not only on business activities, such as the development of new goods and services as well as company-wide increases in productivity, but also financial activities, such as reduction of funding costs and control of market-and payment-related risks.
The first role is to support dynamism in corporate activities. Firms require sophisticated financial services such as financing of newly developed businesses, arranging of capital to satisfy shareholders, reorganizing of global businesses, and hedging of wide-ranging...