Global Financial Integration and Economic Resilience: The Role of Cross-Border Capital Flows in Emerging Markets

Abstract

This study examines how global financial integration is associated with economic resilience through cross-border capital-flow quality and whether domestic buffering capacity conditions the direct integration–resilience association. It distinguishes the potential benefits of international finance from vulnerabilities associated with unstable funding, currency exposures, and weak financial intermediation. A cross-sectional quantitative survey yielded 480 valid responses distributed across 24 coded analytical contexts. Twenty seven-point indicators measured four perceptual constructs. Data were analyzed in SmartPLS 4 using partial least squares structural equation modeling (PLS-SEM) with 5,000 bootstrap subsamples. Measurement assessment covered indicator loadings, Cronbach’s alpha, composite reliability, average variance extracted (AVE), and heterotrait–monotrait ratios (HTMT); structural assessment covered path coefficients, explained variance, effect sizes, the specific indirect effect, and the GFI × DBC interaction. Supplementary context-sensitive and predictive diagnostics were retained as robustness checks. Global financial integration was positively associated with capital-flow quality (β = 0.3316), which was positively associated with economic resilience (β = 0.3325). The specific indirect association was 0.1103, with a 95% bootstrap confidence interval of [0.0676, 0.1611]. The interaction with domestic buffering capacity was positive (β = 0.0773, p = .0396), whereas the direct integration coefficient at mean buffering capacity was positive but borderline under the context-robust test (β = 0.1096, p = .0546). Explained variance was 15.16% for capital-flow quality and 24.04% for economic resilience. GFI’s AVE was 0.4970, indicating marginal convergent validity for that construct. The study contributes by empirically distinguishing international financial connectedness from the quality of cross-border financing and the domestic capacity to absorb financial stress. The findings indicate that the integration–resilience relationship is better interpreted through financing quality and conditional domestic capacity than through openness alone. Because the design is cross-sectional and perception-based, the reported relationships are interpreted as associations rather than causal policy effects.