Wrapping up this module and in fact the course on global capital markets. We've seen the indispensable role that markets fulfill for modern corporations. We've introduced the key markets as they are important for corporations. Equity markets, debt markets, commodity markets and then we moved to the important roles that these markets fulfill. Price discovery, a source of financing, risk diversification, before introducing the key players, the market participants that make markets move. We also discussed some of the shortcomings, the constraints on financing opportunities in these markets and the all important role of liquidity. And we finish up our discussion with globalization of these capital markets, and some of the key events that have characterized the impact of global capital markets. So we can't imaging a world without global capital markets. Undeniably, they have had a positive impact on global economic growth. By providing an effective low-cost source of funds to corporations. By efficiently allocating scarce capital to those projects that deserve it most, by providing transparent price discovery, and by allowing investors and borrowers alike, diversification of risk. But, it's also exposed those same economies and financial corporations and non-financial corporations, to new sources of risk. Volatility spillovers and contagion expose markets economies to systemic risks. Failures in cross-border regulations cause occasional mishaps. Failures in risk evaluation could mean that issues of securities could go mispriced. Conflicts of interest between managers of corporations and the owners of those corporations, the shareholders go unchecked. And last but certainly not least, the increased complexity introduced by these global capital markets has made it that much harder for board of directors and CFO's to get their heads around. So, again highlighting the positive impact in global chemical markets, consider the graph on the left which indicates GDP growth for a range of countries. We can see that most of the GDP growth occurred in the United States, European Union, but we can also see that China is rapidly catching up towards the end of the time series. We can also see that the least developed countries are not nearly displaying the same growth in GDP. Now that becomes even more stark when we express GDP as GDP per capita. Now we see that while China is rapidly increasing it's GDP overall, it is still lagging a long way behind the growth per capita in the European Union and in the United States. So it's clear from those graphs that global capital markets have contributed to economic growth, although the distribution of the benefits of that growth might not have been equal. So regulators have played an important role in making these markets work well. Just to summarize the key regulators for each of the markets that we've considered. First is the Equity markets, securities regulated equity markets, where the focus really is on the retail-invested protection. Then the Debt markets, remember that these are mostly wholesale, over-the-counter platforms. Securities regulated, where the focus is mostly on monetary policy, making sure that the economies are not negatively effected by what happens in the Debt markets. Then the Foreign Exchange markets heavily regulated by central banks, reserve banks but the focus is on financial stability and in securing the value of the national currency. Monetary policy if you want. And then we discussed the unregulated, the underregulated, and the self-regulated markets. Unregulated commodity markets, where it's all about buyer beware. If you participate in commodity markets, you better be aware of the risks that you're facing. The self regulated, derivatives markets where risks can be traded with speculators the self interest of exchanges comes to the fore in market regulation. So while regulation differs across capital markets, there is a theme which binds the regulatory regimes together and that theme has changed. We could distinguish before 2008, regulation from after 2008 regulation. Before 2008, the optimality of free markets was paramount. Minimal regulation should be imposed to keep the cost of regulation down and letting the market do its functions only focusing regulation on inefficiencies. Inefficiencies that were either caused by externalities or caused by imperfect information provided to marked participants. After 2008, unregulated or self-regulated markets no longer seem to be compatible with financial stability and regulation was altered accordingly. So here's a final thought for you. In the wake of market crisis like the global financial crisis CFOs and finance professionals utilizing those global capital markets should reflect on their duties within these markets. Here's a statement from the code of ethics taken from the CFA Institute. Whereby these CFOs and finance professionals should promote the integrity and viability of global capital markets for the ultimate benefit of society. And that completes the second course on global capital markets in this specialization series of four. We hope that you enjoyed the course and that you now appreciate the corporate benefits of financial markets. While being aware of the limitations and risks, what can our students expect next, Shawn? >> Well Paul, now we turn to corporate financial decision making. With the students having developed the vocabulary and the tool set used by CFOs as well as an understanding of market environment in which CFOs operate we are going to shift our focus into the key decisions made by corporations. Specifically we are going to consider project valuation, financing decisions, mergers, acquisitions and corporate restructuring and finally decisions in risk management. That is what instruments are available to manage risks and what is the economic rationale for doing so. >> That sounds like an exciting but also challenging course, Sean. At least the students can be confident that they now have the basic accounting skills and knowledge of markets to tackle the next course successfully. >> Exactly, I'm looking forward to welcoming you in the next course.
