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Is the Virtual Integration of Financial Markets Beneficial in Emerging Markets? Evidence from MILA

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  • Christian Espinosa-Méndez
  • Juan Gorigoitía
  • João Vieito

Abstract

This article analyzes whether the Latin American Integrated Market (MILA) has been beneficial for its participants. Using a dynamic conditional correlation (DCC) model proposed by Engle (2002), we found evidence that creating MILA increased the correlation levels in stock returns of member countries. Evidence indicates that this increase occurs mainly due to the increase in traded volume in the country with the least developed stock market—Peru.In short, findings suggest that in an integration process such as MILA, as stock market members differ, in terms of stock market development, the markets will benefit from the integration. However, in the long term these benefits dissipate over time.

Suggested Citation

  • Christian Espinosa-Méndez & Juan Gorigoitía & João Vieito, 2017. "Is the Virtual Integration of Financial Markets Beneficial in Emerging Markets? Evidence from MILA," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(10), pages 2279-2302, October.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:10:p:2279-2302
    DOI: 10.1080/1540496X.2017.1307101
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    Cited by:

    1. Domingo Rodríguez Benavides & César Gurrola Ríos & Francisco López Herrera, 2021. "Dependencia de los mercados de valores de Argentina, Brasil y México respecto del estadounidense: Covid19 y otras crisis financieras recientes," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 16(3), pages 1-18, Julio - S.
    2. Nuhiu Artor & Peci Bedri & Aliu Florin, 2022. "Assessing the diversification risk of a single equity market: evidence from the largest European stock indexes," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 58(1), pages 3-16, March.
    3. Muhammad Hanif & Ariba Sabah, 2020. "Stock Markets’ Integration in Post Financial Crisis Era: Evidence from Literature," Capital Markets Review, Malaysian Finance Association, vol. 28(2), pages 43-71.

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