Generally speaking,liberalization of financial markets when combined with a weak,underdeveloped domestic financial system tends to
A)strengthen the domestic financial system in the short run.
B)create an environment susceptible to currency and financial crises.
C)raise interest rates and lead to domestic recession.
D)none of the options

Question

Quizplus · Accepted Answer

Liberalization of financial markets without a strong domestic financial system may attract external investors, leading to an influx of foreign capital. However, this can also create a volatile environment susceptible to currency and financial crises if investors withdraw their investments suddenly. Without a developed domestic financial system to manage these capital flows, the country's economy may be negatively impacted.

Generally Speaking,liberalization of Financial Markets When Combined with a Weak,underdeveloped