IMPACT OF GLOBAL FINANCIAL INTEGRATION ON NATIONAL BANKING STABILITY

This paper examines the impact of global financial integration on banking stability, highlighting the interconnectedness of financial markets and the associated vulnerabilities. We explore how financial integration enhances economic growth opportunities while simultaneously increasing exposure to global financial shocks. The study discusses the advantages of integration, such as access to global capital markets and improved liquidity, but also outlines the risks of contagion and financial instability. Using empirical analysis, the paper investigates the relationship between capital flows, exchange rate volatility, and banking stability, comparing developed and emerging markets. The findings underscore the importance of coordinated policy responses to mitigate risks and ensure long-term banking stability. The paper concludes by emphasizing the need for effective management of financial integration to balance its benefits with the potential challenges it poses to banking systems worldwide.