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Financial markets in Emerging Economies: Comparison with developed economies

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  1. Abstract.
    1. Banking industry.
    2. Capital market.
    3. Commodity market.
    4. Financial regulation.
  2. Capital market.
    1. Capital market.
    2. Indian capital market.
    3. Indian debt market.
    4. Chinese capital market.
    5. Problems.
    6. Conclusion.
  3. Banking sector.
    1. Indian banking industry.
    2. Structure.
    3. Retail banking in India.
    4. Future trends.
    5. Mergers and acquisitions.
    6. US banking industry.
    7. Bank performance.
  4. Financial regulation.
    1. The case for financial deregulation.
    2. The regulation of financial markets in India.
    3. The regulation of financial markets in China.
  5. Commodities markets.
    1. The global trends in commodities markets.
    2. Commodities markets recent trends in Emerging countries.
  6. Conclusion.
  7. Bibliography.

The financial markets of emerging economies have seen a huge growth in the last few years. These markets are attracting large investments from the developed world, especially because of higher expected return. At the same time; investments in emerging markets are considered to be riskier than the other similar investments in the developed market. A major reason for a higher risk is the state of financial markets in emerging economies. In the paper, we would look at the broad characteristics of the financial markets in the emerging economies and see how they are different from the financial market of developed economies.
Banking Industry: There have been many recent developments in the banking Industry in emerging economies, such as competition and consolidation. The developments are being driven by technological innovation, deregulation and changes in corporate behaviour, in some cases accentuated by recent banking crises. Important aspects include privatisation of state-owned banks, mergers of domestic banks and entry of foreign banks. We look into the banking industry and see how far the banking system has developed and what is the road ahead.
Capital Market: Emerging Capital markets are considered to de more volatile compared to the capital markets in developed economies.

[...] This creates unnecessary confusion in the areas of clearing and settlement, as well as buying and selling procedures among securities companies and banks outside China that conduct business with local dealers. Problems of Market participant As CSRC becomes the only government supervisor of the equity market, the contradictions between PBC and CSRC do not exist anymore. While, the problems of different dealers and investors of B-shares market are still there. And the quality of lawyers, accountants and appraisers still needs to be improved. [...]

[...] Insurance will emerge as a large business opportunity with a likely market size of US$20bn in FY07E. Agricultural lending is another large market with Rs2600bn potential. Mergers and acquisitions Economies of scale, Geographical expansion and high quantum of NPA are the major reasons of merger and acquisition The trend towards universal banking may also result in cost savings through sharing physical inputs like offices or computer hardware; utilizing common information systems, account service centres; raising capital in larger issue sizes that reduce the impact of fixed costs; or reusing managerial expertise or information A consolidated commercial bank and insurer may lower total costs by cross selling, using each other's customer database at a lower cost than building and maintaining two databases. [...]

[...] Having briefly laid out the present situation with respect to financial regulation in India, we now turn to studying the process in China The regulation of financial markets in China Officially one of the last 3 communist countries in the world, China has, unlike Cuba and North Korea, somewhat deregulated its economy and introduced market forces over the last few decades. After nationalizing all capitalist companies at its creation in 1949, the People's Republic of China has gradually made structural changes to its system, culminating in the 1990s with the creation and growth of two stock markets (Allen et al. [...]

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