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Internationalization of the Taiwan Financial Industry: Equity Markets, Efficiency and Short-Term Capital Flows

Author

Listed:
  • James H. Scott

    (Prudential Investment Management, Inc., 4 Gateway Center Two Newark, NJ 07101, USA)

Abstract

Strong, developed economies need well-functioning equity markets. Such markets require openness. Open equity markets attract different types of investors, some more useful than others. Just like in the debt market, the equity investors who best serve the social good are those who seek to understand the economic fundamentals underlying corporate profitability. Other, momentum, investors are more like gamblers whose presence is largely unavoidable, and who contribute little to economic efficiency or financial stability. The regulatory challenge is to mitigate the effects of momentum investors without discouraging the fundamental investors.

Suggested Citation

  • James H. Scott, 2001. "Internationalization of the Taiwan Financial Industry: Equity Markets, Efficiency and Short-Term Capital Flows," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 329-338.
    • Handle: RePEc:wsi:rpbfmp:v:04:y:2001:i:03:n:s0219091501000449
    DOI: 10.1142/S0219091501000449
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    More about this item

    Keywords

    Fundamental and Momentum Investment Styles; Stock Market Regulation;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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