What Is Financial Interdependence?

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Business partners are working on their computers together.
Business partners are working on their computers together. (Image: Leonard McLane/Photodisc/Getty Images)

Financial interdependence refers to many ways two or more persons or entities depend on each other for economic support. This includes how money moves back and forth between the parties. Examples of interdependence are business partners applying for a loan, people seeking a domestic partnership and countries sharing financial resources across borders.

Micro View

Financial interdependence means two people have demonstrated their common financial interests legally or otherwise, usually by entering shared agreements. These could be legal contracts such as vehicle loans and mortgages and arrangements such as joint bank accounts and joint leases. If two people need a joint business loan or recognition as domestic partners, they must show how they are prepared to enter an agreement and how they will rely on each other for support.

Macro View

At the macro level, a nation's entire economic system can be open to foreign investment and its own citizens can invest in foreign countries' enterprises. Money moving back and forth across borders in this way creates financial interdependence. This money movement leaves one country vulnerable to negative economic events in the country with which it shares interdependence.

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