Financial Integration

Financial integration refers to the process of linking financial systems, markets, and institutions across borders to create a unified global market. This integration allows for the free flow of capital, investment, and financial services between countries, enhancing market efficiency and economic growth. Financial integration promotes risk-sharing, access to broader investment opportunities, and increased competition among financial institutions. However, it also makes markets more interconnected and susceptible to global financial shocks.

Example

European countries' financial integration allows investors to buy and sell stocks, bonds, and other financial instruments seamlessly across borders, fostering cross-country investment and economic cooperation.