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Globalization, Financial Crisis And Contagion: Time - Dynamic Evidence From Financial Markets Of Developing Countries

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  • Simplice A. ASONGU

    ()
    (HEC - Management School, University of Li├Ęge, Belgium)

Abstract

Financial integration among economies has the benefit of improving allocation efficiency and diversifying risk. However the recent global financial crisis, considered as the worst since the Great Depression has re-ignited the fierce debate about the merits of financial globalization and its implications for growth especially in developing countries. This paper examines whether equity markets in emerging countries were vulnerable to contagion during the recent financial meltdown. Findings show: (1) with the exceptions of India and Dhaka, Asian markets were worst hit; (2) but for Peru, Venezuela and Columbia, Latin American countries were least affected; (3) Africa and Middle East emerging markets were averagely contaminated with the exceptions of Kenya, Namibia, Nigeria, Morocco, Dubai, Jordan, Israel, Oman, Saudi Arabia and Lebanon. Results have two important policy implications. Firstly, we confirm that Latin America was most prepared to brace the financial crisis, implying their fiscal and monetary policies are desirous of examination and imitation. Secondly, we have confirmed that strategic opening of the current and capital accounts based on empirical evidence for a given region/country as practiced by India is a caution against global economic and financial shocks.

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Bibliographic Info

Article provided by ASERS Publishing in its journal Journal of Advanced Studies in Finance.

Volume (Year): III (2012)
Issue (Month): 2 (January)
Pages: 131-139

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Handle: RePEc:srs:jasf12:1:v:3:y:2012:i:2:p:131-139

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Keywords: Globalization; financial crisis; contagion; developing countries; equity markets.;

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Citations

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Cited by:
  1. Asongu Simplice, 2011. "Political Crises and Risk of Financial Contagion in Developing Countries: Evidence from Africa," Working Papers 11/003, African Governance and Development Institute..
  2. repec:pra:mprapa:39629 is not listed on IDEAS
  3. Simplice A. Asongu, 2012. "The 2011 Japanese earthquake, tsunami and nuclear crisis: Evidence of contagion from international financial markets," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 4(4), pages 340-353, December.
  4. Simplice A, Asongu, 2012. "Globalization and Africa: implications for human development," MPRA Paper 36541, University Library of Munich, Germany.
  5. Simplice Anutechia ASONGU, 2013. "Globalization and Financial Market Contagion: Evidence from Financial Crisis and Natural Disasters," Chapters of Financial Aspects of Recent Trends in the Global Economy book, in: Rajmund Mirdala (ed.), Financial Aspects of Recent Trends in the Global Economy, volume 1, chapter 1, pages 12-32 ASERS Publishing.

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