**1. Introduction**

International financial markets and emerging markets, financial capital flows play an important role in the economies of developing and developed countries alike, as they are one of the financial policy tools used to mobilize domestic savings and an attractive tool for foreign investments, in addition to their active role in financing economic development plans. With the growing deficit of the public budgets of some countries, these countries have started to search for non-sovereign financial resources to finance their development plans, so the financial markets have become one of the important tools used for such development goals.

The international financial markets and financial capital flows have witnessed tremendous developments in recent years, whether in terms of new financial instruments or terms of structural changes in market divisions, the creation of new markets and the development of regulations related to trading, settlement and clearing, which has called for the various countries of the world to make intensive efforts to keep pace with these changes due to the effects of this, positive on the liquidity and depth of financial markets [1, 2].

Moreover, the main factors for this development are global economic growth and the continent's growing integration into international financial markets. The capital yield at the Johannesburg Stock Exchange (JSE) was 43% in (2005), in third place after Seoul and Warsaw.

The increasing capital flows in the international financial markets and emerging markets, developed countries have raised various concerns worldwide. One main concern is the impact of the sharp decline of capital flows so-called sudden stops on financial markets and the stability of banking systems and the economy [3].

The sudden stops and banking crises have been identified as the two main features of most financial crises, including the recent Asian Financial Crisis and Global Financial Crisis.

However, how capital flows and banking crises are connected remains unanswered. Most current studies on capital flows are empirical work, which faces various challenges. The challenges include how data has been collected and measured in each country and how sensitive the results are to the data and the adopted methodologies [4].

Moreover, the links between capital flows and banking systems have been neglected. This book helps provide some insight into the challenges faced by empirical studies and the lessons of the recent crises.

The book develops theoretical analysis to deepen our understanding of how capital flows, banking systems and financial markets are linked with each other and provides constructive policy implications by overcoming the empirical challenges [5].

However, the problem remains only about (87000) Africans, i.e., less than 0.01% of the total population, benefit from this kind of growth. At present, more than half of the people on the continent survive on less than 1.9 USD a day. The World Bank (2007:79) predicts that by (2030), more than three-quarters of the population of sub-Saharan Africa is likely to be among the world's poorest [6].

The effects of poverty and wealth are not independent processes, but interrelated. Those talking about poverty cannot remain silent about wealth. An important correlation between poverty and wealth concerns financial markets, and in the move towards globalization, this is getting to be even more important [7].

The depth and global ramifications of the East Asian financial crisis which broke out in (1997) have confounded analysts and forecasters, and have been a major cause of more recent periods of extreme volatility in international financial markets. Expectations that the crisis would be confined to the region and that recovery would be relatively rapid have been repeatedly belied by events [6].

By the middle of (1998), it was clear that it was sharply reducing growth rates not only in the directly affected countries but also in most other developing and transition economies. The international liquidity crisis set off by the currency collapse and debt default in the Russian Federation raised the possibility that the full global implications might not yet have been realized [8].

On the other hand, the relatively benign response of financial markets to the later Brazilian currency crisis and the continued rapid growth of some major industrial countries suggest that the repercussions may still be restricted largely to developing countries [9, 10].

Subsequently, to the real economy, which means production and trade financial markets had a secondary or subservient position. The three market segments were

#### *Perspective Chapter: International Financial Markets and Financial Capital Flows... DOI: http://dx.doi.org/10.5772/intechopen.102572*

largely separated from one another. Before the (1970s), financial markets were mainly national markets, thus concentrating on the prevailing national economy. Foreign trade is only related to monetary transactions and foreign investments [11].

Moreover, until the (1970s) international financial markets were regulated politically by the Bretton Woods system, which at its core promoted stable rates of exchange between important currencies and the control of capital transactions. This system provided a relatively stable general framework for the world economy, as well as considerable growth [12].

Financial markets were not limited in terms of individual national economies, but were opened internationally and globally. At the same time, business size and variety grew by scales. Proportions between the real economy and financial systems became inverted, which led to the economic dominance of the financial markets, creating the trigger, Centre and motor for the present wave of globalization [12, 13].
