The Impact of Globalization on Financial Volatility and Risk Management

Abstract

Globalization and international market integration have accelerated the cross-border flow of capital, trade, and information, thereby enhancing the overall efficiency of the global economy. However, this interconnectedness has also intensified financial market volatility due to the rapid transmission of investor sentiment and global instability. This study aims to analyze the relationship between globalization, market integration, and financial volatility, as well as to examine how investors and portfolio managers respond to the associated risks. The research employs a literature review method, focusing on empirical studies published within the last five years. The findings indicate that market integration amplifies the transmission of financial crises and increases the impact of global fluctuations on domestic economic stability. Furthermore, effective risk management and portfolio diversification emerge as key strategies for mitigating heightened market uncertainty. These results underscore the critical importance of coordinated global economic policies in minimizing the domino effects of international financial crises and sustaining long-term economic resilience.