By Sabur Mollah, Asma Mobarek
Inventory industry integration among constructing and rising markets has a variety of advantages for making a international - but strong - international economic system. It raises festival and the potency of neighborhood markets, in flip lowering cost volatility and the price of capital between built-in markets. It additionally generates capital flows, which complement monetary balance and spur monetary development. At its center, inventory industry integration has a huge function to play in either constructing and rising markets nonetheless reeling from the worldwide monetary crisis.
Global inventory industry Integration analyzes the monetary make-up of constructing and rising markets round the area, offering empirical insights into marketplace integration, co-movements in expense, crises, and potency linkages. Mobarek and Mollah argue that the courting among industry integration and marketplace potency inside of constructing and rising international locations isn't the in simple terms degree useful for effecting genuine monetary development. This paintings brings the evaluate of theories and empirical study at the subject updated and expands the present literature with new views on constructed and rising markets.
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Extra info for Global Stock Market Integration: Co-Movement, Crises, and Efficiency in Developed and Emerging Markets
In the same year, Claessens et al. (1995) investigated stock returns of 20 markets including Latin America and concluded that the return series rejects the weakform market efﬁciency hypothesis. Ojah and Karemera (1999) conducted a similar study on these markets and concluded that Latin American markets follow random walk and they are weak-form-efﬁcient except for Chile. Grieb and Reyes (1999), however, demonstrated that Brazil and Mexico are not weakform-efﬁcient. Ortiz and Arjona (2001) analyzed the time series characteristics of six major Latin American equity markets applying the GARCH framework and concluded that due to the presence of heteroskedasticity and autocorrelation, these markets are inefﬁcient.
All return series are signiﬁcantly skewed, except those for MSCI Kenya, MSCI Nigeria, and Nigeria All Share. The indices from Egypt, Morocco, and South Africa display signiﬁcant negatively skewed returns, whereas positively skewed series of returns are encountered for Tunisia, Kenya (NSE20), and Mauritius. The coefﬁcients for kurtosis indicate that the null hypothesis of kurtosis conforming to the normal distribution is rejected, implying that returns exhibit a leptokurtic distribution. The implication of the results for skewness and kurtosis is the rejection of the null hypothesis of normality.
It is well documented that the removal of statutory foreign investment restrictions alone is not sufﬁcient to foster complete ﬁnancial integration with the world capital markets. There are only few studies that consider the driving forces of the efﬁciency. , 2012). , 2005; Bonﬁglioli, 2008; Schindler, 2008). These ofﬁcial liberalization measures only capture the ability of foreign investors to invest in the domestic country (direct barriers) but disregard the existence of indirect barriers that affect foreign investors’ willingness to invest.