Read the Financial Contagion and the Global Financial Crisis case study in Chapter 9 of International Business: The New Realities, 4th edition. Then answer the following questions found at the end of the case.
1. Explain the advantages and disadvantages of the globalization of finance. How did it contribute to the global financial crisis?
2. Describe how the fall of AIG exemplifies contagion. How did the U.S government bailout of AIG benefit foreign as well as U.S firms and investors? Experts are advocating increased regulation to prevent contagion. At the national and international levels, what types of regulation might prevent future crises?
3. Several European countries have adopted a single currency, the euro. Describe how adopting the euro might benefit countries in Eastern Europe. What are the advantages and disadvantages of single currency regime in international financial transactions?
4. As the world emerges from the global financial crisis, what is the potential role of each of the following: firms, banks, central banks, national governments, the International Monetary Fund, and the World Bank? What is the role of national governments in stimulating national economic growth?
When writing your paper, be sure to follow these guidelines:
- It should be 4-6 pages in length, organized, and well-written in conformity with the CSU-Global Guide to Writing & APA (Links to an external site.).
- Support your answers using 4-6 peer-reviewed articles/professional sources in addition to the textbook.
- Include a title page, section headers, introduction, conclusion, and reference page.
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