Migration, Spillovers, and Trade Diversion : The Impact of Internationalization on Stock Market Liquidity
What is the impact of firms that cross-list, issue depositary receipts, or raise capital in international stock markets on the liquidity of remaining firms in domestic markets? Using a panel of over 3,200 firms from 55 countries during 1989-2000, L...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/05/2360827/migration-spillovers-trade-diversion-impact-internationalization-stock-market-liquidity http://hdl.handle.net/10986/18189 |
| Summary: | What is the impact of firms that
cross-list, issue depositary receipts, or raise capital in
international stock markets on the liquidity of remaining
firms in domestic markets? Using a panel of over 3,200 firms
from 55 countries during 1989-2000, Levine and Schmukler
find that internationalization reduces the liquidity of
domestic firms through two channels. First, the trading of
international firms migrates from domestic to international
markets and the reduction in domestic liquidity of
international firms has negative spillover effects on
domestic firm liquidity. Second, there is trade diversion
within domestic markets as liquidity shifts out of domestic
firms and into international firms. |
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