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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

Abstract

Financial integration among economies has the benefit of improving allocative 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 exception of India, 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 exception of Kenya, Morocco, Dubai, Jordan and Lebanon. As a policy implication, India’s step-wise financial liberalization approach should be emulated. Lessons from Latin American fiscal and monetary policies should be learned and/or revised.

Suggested Citation

  • Simplice A, Asongu, 2011. "Globalization, financial crisis and contagion: time-dynamic evidence from financial markets of developing countries," MPRA Paper 30120, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:30120
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    References listed on IDEAS

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    Cited by:

    1. Simplice A, Asongu, 2011. "Political crises and risk of financial contagion in developing countries: Evidence from Africa," MPRA Paper 37459, University Library of Munich, Germany.
    2. Asongu Simplice, 2013. "Globalization and Africa: implications for human development," International Journal of Development Issues, Emerald Group Publishing, vol. 12(3), pages 213-238, September.
    3. Gupta, Priyanshi & Sehgal, Sanjay & Deisting, Florent, 2015. "Time-Varying Bond Market Integration in EMU," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30(4), pages 708-760.
    4. 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, November.
    5. repec:pra:mprapa:39629 is not listed on IDEAS

    More about this item

    Keywords

    Globalization; Financial crisis; Contagion; developing countries; Equity Markets;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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