ON THE DETERMINANTS OF INTERNATIONAL FINANCIAL INTEGRATION IN THE GLOBAL BUSINESS AREA
ON THE DETERMINANTS OF INTERNATIONAL FINANCIAL INTEGRATION IN THE GLOBAL BUSINESS AREA

Summary/Abstract: Through this article we aim to shed light on the determinants of international financial integration in the current global finance area. We tell de jure indicators and de facto indicators apart and seek to assess the marginal explanation power of global (common) factors. Several measures of international financial integration are discussed and tested on both developed markets and the major emerging markets over the period 1988 to 2008, using a dynamic panel methodology. Our findings show that socioeconomic stability, trade openness, local investment, budget surplus, financial development and growth opportunities leads international financial integration. Furthermore, we ascertain the marginal explanation power of the global factors in the sustained rising IFI. Indeed, world interest rate, world economic situation and world PER are a prime determining factors. Our results corroborate recent empirical theory as well as provide a potential usefulness for international portfolio managers and for domestic governors aiming to improve their attractiveness indices.

• Details
• Contents