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International Financial Integration Through Equity Markets

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Author Info

  • Sergio L. Schmukler
  • Stijn Claessens

Abstract

This paper studies international financial integration analyzing firms from various countries raising capital, trading equity, and/or cross-listing in major world stock markets. Using a large sample of 39,517 firms from 111 countries covering the period 1989-2000, we find that, although international financial integration increases substantially over this period, only relatively few countries and firms actively participate in international markets. Firms more likely to internationalize are from larger and more open economies, with higher income, better macroeconomic policies, and worse institutional environments. These firms tend to be larger, grow faster, and have higher returns and more foreign sales. While changes occur with internationalization, these firm attributes are present before internationalization takes place. The results suggest that international financial integration will likely remain constrained by country and firm characteristics.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/138.

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Length: 46
Date of creation: 01 Jun 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/138

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Related research

Keywords: Capital accumulation; Stock markets; international firms; equity markets; stock market; foreign sales; stock exchange; investor protection; nasdaq; equity capital; stock market liberalization; financial markets; stock exchanges; total market capitalization; international capital; international capital markets; stock market internationalization; financial economics; investors; bond; financial globalization; institutional framework; stock market development; financial liberalization; bonds; foreign investors; financial systems; financial system; financial market; stock price; global capital; international financial markets; new york stock exchange; financial market development; cost of capital; fixed costs; international financial system; foreign companies; investment decisions; financial intermediation; rates of return; yankee bonds; world stock markets; stock market liquidity; international country risk guide; stock market capitalization; external financing; corporate valuation; international investors; bond market; foreign stock; equity market; financial services; minority shareholders; retained earnings; public bond;

This paper has been announced in the following NEP Reports:

References

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