Final answer:
Financial integration offers several benefits including the potential to raise domestic savings and stimulate domestic financial development making 'Both a. and c.' the correct option. The correct option is d Both a. and c.
Step-by-step explanation:
The question concerns the benefits of financial integration, specifically in relation to how it can impact domestic savings and stimulate domestic financial development. Financial integration can be understood as the process by which financial markets in different countries become more interconnected. A core benefit of this process is that it can stimulate domestic financial development by introducing domestic markets to a wider range of financial products, innovations, and practices from around the world. This stimulation can lead to the creation of a more robust and competitive domestic financial sector.
Another benefit is the potential to raise domestic savings. Higher domestic savings can result from the inflow of foreign capital, which may reduce the need for foreign financing and could lead to a reduced trade deficit. This is particularly relevant when a country's trade deficit declines in the face of increased private saving, indicating less reliance on foreign capital.
Considering the scenarios presented, the correct option that reflects these benefits is d. Both a. and c., as both raising domestic savings and stimulating domestic financial development are direct benefits of financial integration.