Economic engagement and within emerging markets integration

Nicholas Addai Boamah, Joseph Oscar Akotey and Godfred Aaawaar

Research in International Business and Finance, 2020, vol. 52, issue C

Abstract: We explore the co-movements between emerging markets by employing dynamic conditional correlation approach. We additionally explore the factors that might drive the conditional correlations between emerging markets. We show that trade with the high income countries is a more important driver of the co-movements between emerging markets relative to trade with other emerging markets either within or outside the geographic region of the given country. We further document that the overall health of an economy, investment and market depth explain the correlation between emerging markets. Evidence is also provided that although, the recent emerging markets and global financial crises raised the correlation between emerging markets, not all country pair correlations increased around the period of the crisis. The findings show that economic engagement as opposed to geographic proximity is more relevant in describing within emerging markets integration. The findings suggest that diversification gains could be achieved by strategically investing across some emerging markets even in crisis periods.

Keywords: Financial markets integration; Emerging markets; Current account balance; Economic activity (search for similar items in EconPapers)
JEL-codes: C58 F15 F65 G10 G15 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:52:y:2020:i:c:s0275531919301047

DOI: 10.1016/j.ribaf.2019.101106

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