Financial Integration
Economic integration has an integral part of the global world. Due to changes, the integration has brought different benefits to economies, regions and markets. The benefits are: efficiency, competition, production and trade increase, better quality of products, mobility of inputs, coordination and coherence of policies, a rise in productivity, income and growth, a decrease in deficit of current account and fiscal budget. Economic integration is followed by financial integration, which is obtained when financial markets, institutions and infrastructure are integrated, the law of one price existence, when all the participants have the access to a single market under the same conditions, regulations, prices, etc. According to Agenor (2003), potential benefits of financial integrations are: consumption smoothing, domestic investment and growth, better macroeconomic discipline and enhanced banking system efficiency and financial stability. However, there are potential costs: concentration and possible misallocation of capital flows, volatility and procyclicality of capital flows, jeopardising macroeconomic stability and risks of entry by foreign banks. Even so, the main advantages of financial integration are: better allocation of resources, risks diversification, providing more opportunities for investments, achieving economic growth, and obtaining financial and economic development.