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Contagion And Firms' Internationalization In Latin America : Evidence From Mexico, Brazil, And Chile / Sakho, Yaye Seynabou
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Sakho, Yaye Seynabou
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Bank Policy.
- Capital Market.
- Currencies and Exchange Rates.
- Debt Markets.
- Domestic Market.
- Economic Theory and Research.
- Emerging Market.
- Emerging Markets.
- Exchange.
- Finance.
- Finance and Financial Sector Development.
- Financial Contagion.
- Financial Literacy.
- Financial Markets.
- Information Asymmetry.
- International Capital.
- International Capital Market.
- International Investors.
- Investment and Investment Climate.
- Liquidity.
- Local Market.
- Macroeconomics and Economic Growth.
- Market Efficiency.
- Markets and Market Access.
- Portfolio.
- Private Sector Development.
- Share.
- Stock.
- Stocks.
- Local Subjects:
- Bank Policy.
- Capital Market.
- Currencies and Exchange Rates.
- Debt Markets.
- Domestic Market.
- Economic Theory and Research.
- Emerging Market.
- Emerging Markets.
- Exchange.
- Finance.
- Finance and Financial Sector Development.
- Financial Contagion.
- Financial Literacy.
- Financial Markets.
- Information Asymmetry.
- International Capital.
- International Capital Market.
- International Investors.
- Investment and Investment Climate.
- Liquidity.
- Local Market.
- Macroeconomics and Economic Growth.
- Market Efficiency.
- Markets and Market Access.
- Portfolio.
- Private Sector Development.
- Share.
- Stock.
- Stocks.
- Physical Description:
- 1 online resource (54 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2006
- System Details:
- data file
- Summary:
- The author investigates whether contagion matters when emerging market firms cross-list their stocks in a developed capital market. She develops a rational expectations model where financial markets are segmented along emerging markets' borders and contagion spreads from one emerging market to another through the actions of international investors rebalancing their portfolio using stocks cross-listed in the developed market. The author finds that contagion is a cost of internationalization as cross-listed stocks are more affected by contagion than pure domestic stocks. Furthermore, a welfare analysis of international cross-listing versus financial autarky suggests that the benefits of internationalization in terms of less information asymmetry and better market efficiency offset the costs of contagion. Her model is able to explain some transmission of the 1998 Brazilian crisis to Mexico and Chile.
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