This is an interesting graphical illustration and summary of the financial vehicles which fuel the global growth. Its instructive that the most important part is played by Corp-debt securities in this rise. This links back to the earlier story on poverty and ownership rights that free up the economic assets. Its the clarity in ownership that helps the corporates to hedge risks using derivatives which are asset-backed. If the asset liquidity wasn’t possible .. and lot of this growth would be impossible!
As the stock of global financial assets continues to grow, companies can improve their access to capital and their allocation of risk. What fuels this growth? Debt, debt, and more debt.
Executives planning to expand internationally in the new year will find that they have more varied funding sources than ever. Global financial markets now boast unprecedented depth, integration, and liquidity. Deeper markets provide better access to capital and improve the allocation of risk.
Much of the growth in global financial assets over the past 25 years has come from a rapid expansion of corporate and government debt. Corporate-debt securities are the largest—and fastest-growing—component of the global financial stock. Together with government debt securities, they account for nearly half of the overall growth in global financial assets from 1993 to 2003. Debt has increased across all major countries and regions. International issues of corporate debt, though still small, are growing more than three times as fast as domestic issues (22 and 7 percent a year, respectively), reflecting the increasing globalization of capital as companies seek funds outside their domestic borders.
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