Financial Markets and Real Estate: The Potential for International Integration

Level: Undergraduate | Grade: 2:1 | Approx. Word Count: 1,550

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Overview

During recent decades, there has been a continuing discussion regarding the extent to which financial and real estate markets have become integrated in the international environment. In this essay, the rationale behind this integrated objective and the current level of achievement in this process is discussed. It then seeks to determine and identify the causal factors that are seen to be delaying this process.

There is little doubt that the continued globalisation of trade has been the driving force behind the process of international market integration. Furthermore, it is this process that has led to the liberalisation of domestic financial market, which in turn has facilitated the development of an integrated global financial and capital market environment (Lothian 2002; McLeod 2002). The main objective of the internationalised financial market was to create an environment where a recognisable exchange rates monetary system would serve as a guide to resolve the pricing differential that existed between currencies (Edison et al 2002). In other words, this monetary system allowed sellers and buyers to determine how goods priced in the domestic currency equated in relation to the currency of the country in which these were being bought or sold, thus ensuring their preferred margins were maintained (Goldberg et al 2001).