What Is an International Capital Market?

An international capital market is a financial system by which governments, companies and individuals borrow and invest money trans-nationally. It is comparable to a capital market, which enables government entities, companies and individuals to borrow and invest domestically. Both systems occur between those with excessive funds and those with deficient funds.

International capital markets are considered beneficial for two key reasons. The first is that they diversify the transfer of capital, often allowing those involved to access larger markets and therefore either greater returns on investments or lower costs on borrowing.

The second benefit is the reduction of risk. This is based on the assumption that other countries will be subject to different economic trends.