ABSTRACT
This chapter outlines the dramatic changes that go by the name globalization. It focuses on to discuss how these changes have occurred historically and what they mean for the competitive environment among firms. The chapter examines how these changes are affecting the location of financial activity, with special attention to the three main global centers — London, Tokyo, and New York. Globalization is shorthand for the continuing international integration of the world's national financial markets. Domestic financial markets are more closely linked by the ease of cross-border financing. The continuing integration of financial markets reflects the global integration and growing interdependence of national economies. Greater volatility increases the risk exposure of financial intermediaries, who must match the term structure of their assets and liabilities. Post-war economic growth in Europe, Japan, and other Pacific nations has generated new opportunities for financial services activity in non-U.S. financial centers.
