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Financial development, international trade integration, and stock market integration: Evidence from Asia

Author

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  • Vithessonthi, Chaiporn
  • Kumarasinghe, Sriyalatha

Abstract

This paper provides an analysis of the influence of financial development and international trade integration on stock market integration. Using a panel sample of 15 developed and developing countries in Asia over the period 1985–2013, we show that a country’s financial development has a positive effect on its stock market integration with the world’s stock market, and that a country’s international trade integration is not associated with its stock market integration with the world’s stock market. In addition, the degree of bilateral stock market integration cannot be explained by variation in bilateral international trade integration.

Suggested Citation

  • Vithessonthi, Chaiporn & Kumarasinghe, Sriyalatha, 2016. "Financial development, international trade integration, and stock market integration: Evidence from Asia," Journal of Multinational Financial Management, Elsevier, vol. 35(C), pages 79-92.
    • Handle: RePEc:eee:mulfin:v:35:y:2016:i:c:p:79-92
    DOI: 10.1016/j.mulfin.2016.03.001
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    Citations

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    Cited by:

    1. Jonathan A. Batten & Xuan Vinh Vo, 2016. "Bank risk shifting and diversification in an emerging market," Risk Management, Palgrave Macmillan, vol. 18(4), pages 217-235, December.
    2. Lingling Qian & Yuexiang Jiang & Huaigang Long, 2023. "Extreme risk spillovers between China and major international stock markets," Modern Finance, Modern Finance Institute, vol. 1(1), pages 30-34.
    3. Beini Guo & Oyakhilome Ibhagui, 2019. "China–Africa stock market linkages and the global financial crisis," Journal of Asset Management, Palgrave Macmillan, vol. 20(4), pages 301-316, July.
    4. Han, Lei & Han, Botang & Shi, Xunpeng & Su, Bin & Lv, Xin & Lei, Xiao, 2018. "Energy efficiency convergence across countries in the context of China’s Belt and Road initiative," Applied Energy, Elsevier, vol. 213(C), pages 112-122.
    5. Yang, Lu & Tian, Shuairu & Yang, Wei & Xu, Mingli & Hamori, Shigeyuki, 2018. "Dependence structures between Chinese stock markets and the international financial market: Evidence from a wavelet-based quantile regression approach," The North American Journal of Economics and Finance, Elsevier, vol. 45(C), pages 116-137.
    6. Lingling Qian & Yuexiang Jiang & Huaigang Long, 2023. "What drives the dependence between the Chinese and global stock markets?," Modern Finance, Modern Finance Institute, vol. 1(1), pages 12-16.
    7. Caporale, Guglielmo Maria & You, Kefei & Chen, Lei, 2019. "Global and regional stock market integration in Asia: A panel convergence approach," International Review of Financial Analysis, Elsevier, vol. 65(C).
    8. P. K. Mishra & S. K. Mishra, 2022. "Is the Impact of COVID-19 Significant in Determining Equity Market Integration? Insights from BRICS Economies," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(2), pages 137-162, May.
    9. Ahmed Shafique Joyo & Lin Lefen, 2019. "Stock Market Integration of Pakistan with Its Trading Partners: A Multivariate DCC-GARCH Model Approach," Sustainability, MDPI, vol. 11(2), pages 1-23, January.

    More about this item

    Keywords

    Asia; Emerging markets; Financial development; Stock market integration; International trade integration;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F3 - International Economics - - International Finance
    • F6 - International Economics - - Economic Impacts of Globalization

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