An Analysis of the Global Financial System: Amazon's Context

This report delves into the intricacies of the Global Financial System, with a specific focus on the context of Amazon, Inc. It begins by defining the Global Financial System and its significance in the era of globalization, highlighting the interconnectedness of economies and businesses. The research then outlines its purpose, objectives, and research questions, which include assessing changes since the 2007-08 financial crisis, the impact of the international banking sector's collapse on net financial flows in developing countries, and the influence of weak growth prospects and low commodity prices. The report also investigates the role of non-resident portfolio inflows, South-South finance, and public financial flows. A thorough literature review supports the research questions, exploring topics such as the sub-prime mortgage crisis and its effects, net financial flows in developing countries, and the impact of weak growth and commodity prices. The methodology includes research philosophy, approaches, design, data collection, sampling, and ethical considerations. The report concludes with data analysis, interpretation, reflection, and alternative research methodologies, offering a comprehensive understanding of the Global Financial System and its key players.

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Table of Contents
TOPIC..............................................................................................................................................1
SECTION 1: TITLE, OBJECTIVE, RESPONSIBILITIES............................................................1
1.1: Purpose of the research .......................................................................................................2
1.2: Research Objectives.............................................................................................................2
1.3: Intervention..........................................................................................................................3
1.4: Principal outcome................................................................................................................3
SECTION 2: REASONS FOR CHOOSING THIS RESEARCH PROJECT.................................3
SECTION 3: LITERATURE REVIEW..........................................................................................3
SECTION 4: ACTIVITIES AND TIMESCALES..........................................................................7
SECTION 5: RESEARCH APPROACH AND METHODOLOGIES...........................................8
Research philosophy...................................................................................................................8
Research Approaches..................................................................................................................8
Research Design..........................................................................................................................8
Data collection............................................................................................................................9
Sampling.....................................................................................................................................9
Ethical consideration...................................................................................................................9
DISCUSSION .................................................................................................................................9
SECTION 6: DATA ANALYSIS AND INTERPRETATION.....................................................12
REFLECTION AND ALTERNATIVE RESEARCH METHODOLOGY...................................22
Reflection..................................................................................................................................22
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................24
ANNEXURES...............................................................................................................................26
1. RESEARCH PROPOSAL FORM........................................................................................26
2. RESEARCH ETHICS APPROVAL FORM........................................................................29

TOPIC
“The Global Financial System”
SECTION 1: TITLE, OBJECTIVE, RESPONSIBILITIES
TITLE: Investigating the Global Financial System in the context of Amazon, Inc.
Overview
Globalisation, in the present day scenario has led to the development of extensive
integration as well as inter-connectedness between individuals, economies as well as business
process systems among the organisations (Abubakar and Ilkan, 2016). As a result, smallest of
business organisations and investors can direct their wealth around the world without any
difficulties. Due to this, there is an increased degree of freedom to move financial resources
prevalent in the current business environment that has led to the enhancement of trade finances
The Global Financial System can be defined as a globalised framework that governs the
mechanism of legal agreements, institutions, and agents that decide the flow of global financial
capital within a variety of markets from trade financing and investment perspective.
Globalization is not integrated with economic factors it includes other factors as well for
example exchange tools and techniques, cultural awareness, attitude of individuals etc. Due to
this reason organizations are more concern about skilled people because it help the business to
increase their employees efficiency as well as performance (Srinivasan, Rutz and Pauwels,
2016). It further helps in increasing productivity as well as profitability to achieve business goals
& objectives. This report help the individual to analyse that how globalization help the business
to move towards success. Researcher identify those factors which positively as well as negatively
affect the business and it is the main aim or objective of entire research. By using different
methodology which helps the researcher to collect findings through various sources and it can be
primary and secondary. So it is helpful in providing accurate conclusion along with reliable
results which is in favour of nature.
Background
Amazon.com is an American multinational technology based company which is situated
in Seattle, Washington. This company majorly focuses on e – commerce, digital streaming,
artificial intelligence, cloud computing etc. These four technology helps the customers to make
their daily life more easy and they compete with other big brand company such as Google, Apple

and Facebook. Amazon founded by Jeff Bezos in the 1994 and they provide globally serve their
services to satisfy their customer's need and desires. Total number of employees are working in
the company is about 647,500 in the worldwide. In 2000, U.S toy retailer company agreed to
entered in a 10 years agreement with the Amazon company with $50million annually with cut of
sales. In 2018, Amazon reached an agreement with Apple Inc. to sell their brand products by
using their services channels (Agnihotri and et. al., 2012).
1.1: Purpose of the research
The purpose of this research is to investigate the Global Financial System.
1.2: Research Objectives
The research key objectives are as follows:
 To ascertain the changes in Global Financial System since 2007-08.
 To determine the negative impact on net financial flows due to collapse of international
banking sector.
 To find out whether or not weak growth prospects in key emerging markets and low
commodity prices further supported Financial System Crisis.
 To investigate the contribution of higher non-resident portfolio inflows resulting from
prolonged ultra-low interest rates in advanced economies and the ensuing “search of
yield”.
 To analyse how the East and South Asian countries act as recipients as well as providers
of global financial flows so as to determine whether South-South Finance is a growing
trend or not. To investigate the truth behind public financial flows acting as an instrument for
mitigating decline in private flows.
Research Questions:
Based on the research objectives established above, the following research questions have
been formulated:
 Ascertain whether the global financial system has changed significantly since the 2007-
08 financial crisis (Sub-prime mortgage)?
 Have developing countries have seen a decline in their net financial flows due to the
collapse of the international banking sector - true or false?

 Was the financial system's crisis further exacerbated by weak growth prospects in key
emerging markets and low commodity prices from 2014-15?
 Not-with-standing, was the decline somewhat offset by higher non-resident portfolio
inflows, which resulted from prolonged ultra-low interest rates in advanced economies
and the ensuing “search or yield”?
 While countries in East and South Asia continue to be major recipients of global financial
flows, they have also become major providers, particularly for other developing
countries. Hence, South-South finance is a growing trend. True or false?
 Additionally, public financial flows, namely overseas development assistance and
multilateral lending, have exhibited strong growth since 2007 further mitigating the
decline in private flows. True or false” K4D (2019)
1.3: Intervention
The action taken to improve the area of research of the Global Financial System will be
to gather evidence regarding new development.
1.4: Principal outcome
The main outcome will be to triangulate all the stakeholders' perception of new
development.
SECTION 2: REASONS FOR CHOOSING THIS RESEARCH PROJECT
Globalization is the critical aspect which provide advantage to organization in order to
increase their reach to the international customers (Babić Rosario and et. al., 2016). This research
topic help the researcher to identify benefits of globalization and it help the business to expand
their operational activities in order to capture international market along with foreign customers.
This research helps in understanding the future growth which can be possible after globalizing
their business. Along with this, this researcher also aid to provide limitation which is important
to know because external factors will affect the organization.
SECTION 3: LITERATURE REVIEW
Use of key literature sources to support your research question, objective or hypothesis:
Sub-prime mortgage crisis:
Mortgage crises is the nationwide financial crises which occur in the duration of 2007 to
2010. It was contributed in United States recession from December 2007 to June 2009.

It was initiated through decline in the housing bubble, foreclosure, devaluation of house
properties values and other securities (Baumeister and Kilian, 2016). Housing bubble will blast
due to financial crisis with mortgage backed securities which impact the worlds economy. They
initially offer high interest rates rather than government secures such as bonds etc. along with
this, high rating agencies also attract the customer through risk rating system. Financial crises
started in 2007 and in the September 2008, most of financial institutions are collapse which
directly impact the flow of credit among the organization as well as for individuals and it
generate more global recessions.
Along with this, there are many causes of crises where commentator blame financial
institution, credit agencies, regulators, consumers etc. Majorly there are two proximate cause
such as increase sub prime lending and housing speculation. Lower quality sub-prime mortgage
originated during the year where historical rate is 8% and it was lower range about 20% from
2004 to 2006.
Developing countries net financial flows:
According to Zucman (2013), it is true that due to financial crises developing countries
also get affected and it impacts the net financial flow of the organization as well as whole
country. Western Asia experienced a huge decline in their resources and particular driven are
also get affected such as oil prices. Along with this, countries separately make an international
reserve to compensate external demand in order to maintain their market position. Latin America
and Caribbean face the lower investment on a net basis where export earning of the company
will reduce. Only East and South Asia face the situation where negative net transfer will
increased (Cheung and Thadani, 2012). Due to financial crisis countries fail to export and it
affect their production or profitability level. In the developing countries, drastic decline in the
economy will affect the overall export business which reduce the revenue and setting of fiscal
deficit. Due to current policies of the economy will increase renewable global imbalance. In the
duration of financial crises, exchange rate instability will become major risk for the country
which affect the global growth and demand.
Due to financial crises, demand of commodity will reduce due to decline in commodity
price and it will further affect the demand of product and exporting economics. Raise in the price
of commodity will provide huge growth which can possible to seen in many emerging market.
Weak growth prospects in key emerging markets and low commodity prices from 2014-15?

As per Baumeister and Kilian (2016), slowdown growth affect the various countries and
it will vary according to the different cause. Due to global financial crises, markets get affected
along with separate economy where countries try to recover and GDP growth in 2010 was 7.5%.
Continuous five year economic growth will reduce in emerging market economic. GDP in 2015
was 4% which is slow but in comparison to previous observed growth before financial crises and
it was good. As per researcher, growth of the economy has been weaker in the last three years
and it was before financial crises (De Maeyer, 2012). In Brazil, potential growth will reduce the
commodity prices due to hitting investment activities along with key export sectors. Weak
infrastructure will provide poor production which further affect the productivity as well as
profitability. External factors also affect the emerging market such as global trade, global
financial activities, commodity market fluctuation and emerging market activities. These factors
initially observe that important for the country and after that domestic factors play large role in
dampening growth.
Financial decline offset: by higher non-resident portfolio inflows, which resulted from prolonged
ultra-low interest rates in advanced economies and the ensuing “search or yield”
As per the article of global finance system and developing countries (2018), financial
system will be changes after 2007-08 financial crises. Mostly developing country's net financial
flow was decline due to collapse of the international banking sector. It further change because of
poor growth in the key emerging market and low commodity price in the period of 2014 – 15.
previous decline in the financial market will be off set through high non residential portfolio
inflows which resulted from prolonged ultra low interest rate in advanced economics and they
ensure that “ search yield”. East and South Asia countries will be the major recipients of global
financial flows which affect the other countries too, through export services, exchange of
services etc. Currently South finance growth is on trend along with public finance flow overseas
the development assistance and multilateral lending (Verma, Sharma and Sheth, 2016). In the
2007, exhibited growth will be decline through mitigating private flow in the market and then
economy.
Growth trends: East and South Asia have become major providers, global financial flows
Sharma and Kukreja (2013) agreed that South- South finance is a growing trend because
when East and South Asia countries are major participants of global financial flow (Hu, Du and
Damangir, 2014). They are also major providers for other developing countries after financial

crises. Counties facing various challenges at the time of developing their nation such as.
Countries face problems at the time of implementing monetary policy in the developed country,
debt sustainability which is use at the time of collapse in cross broader bank lending due to
financial crises. Fluctuation in commodity price where international price of commodity in 2014-
15 generate looser as well as winner in the developing countries and it will be happen after
implementing in the financial flow. Previously written challenges are medium term and there are
some long term challenges too which developing countries have to face. Such as non traditional
financial services which is more concern about shifting of risk because it will provide future
opportunities. South- South finances which increase connectivity, provide various benefits and
poses challenges which is going forward. South financial institutions regulations are more tightly
in comparison to the North side countries regulation.
Overseas development assistance and multilateral lending have exhibited strong growth since
2007
According to Lietaer and Zaccai (2017), it is true that public financial flows, namely
overseas development assistance and multilateral lending, have exhibited strong growth since
2007. Further challenges will be mitigating through declining private flows. Along with this,
IMF recommend following mitigation strategies in order to reduce outflow during monetary
policy. Developing country has to maintain sound microeconomic structure, financial policies
which taking into accounts that each country able to identify cyclical position, balance sheet
vulnerabilities and policy space (Hudson and Thal, 2013). Develop appropriate buffers which is
used at the time of stress and increase the international reserved in order to support exchange
rate authorities and try to make more flexible so every country can follow it properly. Countries
have to monitor foreign exchange exposure to ensure the capacity of absorb exchange rate risk.

SECTION 4: ACTIVITIES AND TIMESCALES
3 methods from research methods

Interviews- It is conversation where the different questions are asked and also answers
are to be given. It consists interviewer who coordinated conversation process and also some
questions to interviewee related to specific area. The rationale for using this research method is
that it is useful tool to obtain the detailed information and data regarding perception, opinions
and feelings of interviewee. From the mention timescale, interview method start from 15 July
2019 to 16 September 2019. According to this, interview process has been finished in 1 day and
it completed by 13%. The interview has been conducted to know about opinion of different
people regarding particular area. There has been face- to- face interview conducted.
Observation- It is way of gathering the data by observing. In this, information is sought
trough direct observation of researcher without asking from chosen respondents. The benefit of
using this method is that it is free from the biasness. This method is time consuming as wel as
expensive and provides the limited information. The observation starts from 8 July 2019 to 29
September 2019.
Questionnaire- It is an instrument including the series of questions for aim of collecting
information from the respondents. It can be in the form of written and carried out through
telephone, post, face-to face and telephone. Under this, different questions has been developed
concerned with the particular area for getting the knowledge about particular subject. The main
reason to using questionnaire is that large number of people can relatively reached in an easy
manner, it helps in provide the quantifiable answers for research area. In this, questionnaire has
distributed and filled between 17 June 2019 to 1 July 2019 and in this time period 70%
questionnaires have been filled. These were distributed through using emails, post etc.
SECTION 5: RESEARCH APPROACH AND METHODOLOGIES
Research methodology is an effective approach which helps research in making effective
and systematic plan to achieve common goals and objectives in a systematic manner.
Research methods:
Research methods gives in depth analysis on a particular subject matter and fill the gaps
on the current knowledge based on the particular area of study. It can be further classified into
quantitative research methods (Lietaer and Zaccai, 2017). Quantitative research methods focuses
on dealing with various numbers ,statistical data,computable techniques and mathematical
techniques for critically examining the subject matter (Organising Your Social Sciences

Research Paper:Quantitative Methods,2019). It can be done though online polls, questionnaire,
online surveys, interview etc.
Research philosophy
It is defined as the belief regarding way in which the data related to phenomenon should
be collected, analysed and then used in better manner. Interpretivism and positivism are two
different kinds of research philosophies.
In conducting this investigation, researcher uses the interpretivism research philosophy
because it helps in analyse the opinions and view points of different researchers in better manner.
Research Approaches
It is a procedure and plan for an investigation that considered steps from wider
assumption to the detailed methods of data collection and then analyse them in better manner.
The different types of research approaches are inductive and deductive (Zucman, 2013).
There has been inductive research approach used by researcher because it is based on the
qualitative research method and it aids in attaining the specific aims and objectives for getting
positive outcomes.
Research Design
It is a framework of the techniques and methods which are selected through an
investigators to combine different research related components in logical way so that issues can
be handled in an effective manner. It is generally used in gathering as well as analysing the
measures of variables which are specified in research problem. Descriptive, explanatory and
experimental are different kinds of research design (Melis and et. al., 2015).
Under this investigation, researcher has been used the descriptive research design because
it provides the detailed information and data about the particular area. It gives an in- depth
analysis regarding particular area.
Data collection
It is a procedure of collecting and measuring the relevant information or data on targeted
variable in systematic manner. It is necessary that the data should be reliable and authentic that
can helpful in getting positive outcomes. The primary and secondary are two different methods
of data collection.

The primary method has been used in developing questionnaire on which various
questions are mentioned regarding particular area or getting answers of relevant questions. On
the other hand, secondary method has been used in conducting literature review part by using
books, journals, articles and many other sources (Onishi and Manchanda, 2012).
Sampling
It is explained as procedure that is used in the statistical analysis in which predetermined
observations are taken from larger population. Methodology that is used to sample from large
population is based on type of the analysis that is being performed. Under this, random data
sampling method has been used and through this 40 respondents has been selected. This method
is beneficial because it is not biased and provide equal chance to all the chosen respondents.
Ethical consideration
Ethics are standards and norms that can distinguish among wrong and right. It aids in
identify difference among acceptable and the unacceptable behaviours. Under this, researcher
should conduct the research by follow all necessary ethical considerations in a better manner. It
is essential that the information and data should be collected by using the authentic and the valid
sources for getting the beneficial outcomes. At the time of conducting an investigation,
researcher will assure to keep safe and secure the data of respondents and also should not be
leaked. The subject area of researcher should not be sensitive (Pappas, 2016).
DISCUSSION
Sub-prime mortgage crisis:
In the above discussed it was stated that the sub-prime mortgage crisis was triggered by
hedge funds, banks, and insurance firms (Global finance system and developing countries, 2018).
Household possession varied around 65%, property foreclosure rates are very low, and housing
construction and home prices primarily expressed bounces in mortgage interest and revenue
levels. Sub-prime borrowers are the one which do not have enough or good credit historical
therefore they lenders pay higher rates to include more return on both the higher danger. This
usually makes quarterly transfers too costly for several sub-prime borrowers (Peltier, Zahay and
Lehmann, 2013).
Developing countries net financial flows: