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Financial Markets Integration: Appraising the Developed and Emerging Markets Nexus

Author

Listed:
  • Adegbemi Babatunde Onakoya

    (Department of Economics, Banking and Finance, Babcock University, Ilishan Remo, Nigeria,)

  • Adedotun Victor Seyingbo

    (Development Agenda for Western Nigeria (DAWN) Commission, Nigeria.)

Abstract

While many economists see financial globalization (financial markets integration) as critical to the development and strengthening of middle-income emerging markets, many have opined that financial integration carries huge risk that far outweighs potential benefits for most middle-income countries. This study therefore investigated the interdependence between emerging markets and developed markets. The study deployed the Diebold and Yilmaz methodological approach to investigate spill-over between markets. The research concluded that there exists interdependence between developed markets and emerging markets. The net benefits argument of financial markets held. Given increasing globalization none of the markets, whether developed or emerging is immune from the dynamics of global markets with consequential beneficial and deleterious impacts. The study recommended that emerging markets should institute reforms capable of enhancing a beneficial involvement in the global integration of financial markets. Macroeconomic reform is crucial if economies will benefit from financial markets integration. Exchange rate, inflation, fiscal deficits policies must be such that communicates macroeconomic stability, as this in turn suggests an investible territory to investors.

Suggested Citation

  • Adegbemi Babatunde Onakoya & Adedotun Victor Seyingbo, 2017. "Financial Markets Integration: Appraising the Developed and Emerging Markets Nexus," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 613-624.
    • Handle: RePEc:eco:journ1:2017-03-82
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    Keywords

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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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