Regional Integration of Stock Markets in Latin America

Heaney, Richard; Hooper, Vince; Jaugietis, Martin

doi:2002.17.4.745

Journal of Economic Integration 2002 April;17(4) :745-760.
DOI: https://doi.org/10.11130/jei.2002.17.4.745

Regional Integration of Stock Markets in Latin America

Richard Heaney, Vince Hooper, Martin Jaugietis

Australian National University
University of South Wales
Towers Perrin

ABSTRACT

This paper examines the trend towards regionalism upon stock market returns in Latin America. Average correlations with other countries in the region and with the world suggest that the Latin American stock markets have become more regionally integrated over the study period. This finding reflects the growing cooperation between Latin American countries since liberalisation in the early 1990s. Prior to liberalisation, Latin American stock market returns showed greater association with the more developed markets, particularly the USA, than with their closest neighbour. This may have been due to the high dependence upon debt from these developed countries. Analysis highlights the importance of stock market data in helping researchers understand and monitor the regional integration process in Latin America. JEL Classifications (F15, F36, G12, G15)

Keywords: Regionalism | Time Changing Correlations | Integration

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