Globalization can broadly be defined as a process through which the regional economies become open economies from essentially being a closed one. They get integrated in terms of trade and commerce, social culture aided and supported by global network of communication. The globalization results into flowing of capital and technologies across boundaries and continents. It is usually recognized as being driven by a combination of economic, technological, sociocultural, political, and biological factors.
Globalization often reflects increased connectivity and thus increased interdependence of the global markets.
This has become all the more important in last decade as the technological advances have made easier for people to travel, trade, communicate and do business internationally.Two major recent driving forces are advances in telecommunications infrastructure and the rise of the internet. In general, as economies become more connected to other economies, they have increased opportunity but also increased competition. Thus, globalization has becomes more and more common feature of world economics.
Globalization has also changed financial management over the period of time and would also do so in future. The initial Fund model of demand-management mainly through monetary policy was gradually modified to incorporate other variables that affected aggregate demand. The firms raising money got affected through and by the interest rates prevailing no only in their country but by global interest rates. With the developed economy moving towards almost zero interest regime, the corporations in the developing / emerging economy started looking more and more towards foreign investments which bought their costs of borrowing significantly down. On the other hand, the developed economies also starter looking towards developing / emerging economies as it offered them better future valuations.
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