Europe as a Global Macro-Region
Edited by Kathy Pain and Gilles Van Hamme
Chapter 7: European stock markets in the arena of financial globalization
In the context of globalization, massive changes have disrupted the financial industry since the 1980s, leading to global financial integration. Liberal reforms, initiated to a large extent by the United States and the emblematic British 'Big Bang', have had significant consequences which are of geographic significance. The deregulation process has contributed to the 'de-compartmentalization' of financial markets: barriers between markets have diminished and transnational financial flows have intensified, precipitating the so-called financialization of the world economy. Moreover, this revolution in financial rules and the regulatory environment has been facilitated by rapid advances in information technology. Theoretically, it is possible to raise capital as well as list and trade equities on any stock market worldwide. In consequence, the high mobility and ubiquity of capital in the twenty-first century raises new questions about the ongoing relevance of geography, place and distance in financial globalization (O'Brien, 1992; Cairncross, 1997). However, many barriers counterbalance the process of global financial integration and corroborate the ongoing relevance of spaces and places. Lack of compatibility between technology systems, diverse rules and regulatory environments, significantly different local competencies and unequal liquidity and market opportunities, reinforce the pertinence of listing places. Hence, far from constructing a fluid, smooth and uniform world of financial flows, in reality the stock exchange industry creates spatial disparities and creates or revives territorial boundaries whilst simultaneously reinforcing the concentration of financial actors within global cities (Sassen, 1991, 2002b) and macro-regional financial structures in contemporary globalization.
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