Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile
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...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2006/12/7245802/contagion-firms-internationalization-latin-america-evidence-mexico-brazil-chile http://hdl.handle.net/10986/8859 |
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okr-10986-88592021-04-23T14:02:41Z Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile Sakho, Yaye Seynabou ASSETS ASYMMETRIC INFORMATION CAPITAL MARKET CAPITAL MARKETS CONTAGION CRISIS AFFECTED DEMAND CURVE DEMAND FUNCTIONS DOMESTIC MARKET EMERGING MARKET EMERGING MARKETS EQUILIBRIUM EQUILIBRIUM PRICES EXCESS DEMAND EXPECTED RETURNS EXTERNALITY FINANCIAL CRISES FINANCIAL INTERNATIONALIZATION FINANCIAL MARKET FINANCIAL MARKETS FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SECURITIES FUTURE RESEARCH GLOBALIZATION HEDGE FUNDS INFORMATION ASYMMETRY INSURANCE INTEREST RATE INTERNATIONAL CAPITAL MARKET INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INVESTMENT BARRIERS LIQUIDATION LIQUIDITY M1 M2 M3 MACROECONOMIC POLICY MARKET INTEGRATION MARKET PRICES MARKET SEGMENTATION MARKET TRANSPARENCY MUTUAL FUNDS PORTFOLIO PORTFOLIOS PRICE CHANGE PRICE CHANGES PRICE DECREASE PRICE DECREASES PRICE EFFECT PRICES RATE OF RETURN RISK AVERSION RISK EXPOSURE SALE SALES SECURITIES MARKETS SHORT SALES SPREAD STOCK PRICES STOCKS TRADERS UTILITY FUNCTIONS VOLATILITY WEALTH 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. 2012-06-22T20:14:27Z 2012-06-22T20:14:27Z 2006-12 http://documents.worldbank.org/curated/en/2006/12/7245802/contagion-firms-internationalization-latin-america-evidence-mexico-brazil-chile http://hdl.handle.net/10986/8859 English en_US Policy Research Working Paper; No. 4076 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ASSETS ASYMMETRIC INFORMATION CAPITAL MARKET CAPITAL MARKETS CONTAGION CRISIS AFFECTED DEMAND CURVE DEMAND FUNCTIONS DOMESTIC MARKET EMERGING MARKET EMERGING MARKETS EQUILIBRIUM EQUILIBRIUM PRICES EXCESS DEMAND EXPECTED RETURNS EXTERNALITY FINANCIAL CRISES FINANCIAL INTERNATIONALIZATION FINANCIAL MARKET FINANCIAL MARKETS FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SECURITIES FUTURE RESEARCH GLOBALIZATION HEDGE FUNDS INFORMATION ASYMMETRY INSURANCE INTEREST RATE INTERNATIONAL CAPITAL MARKET INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INVESTMENT BARRIERS LIQUIDATION LIQUIDITY M1 M2 M3 MACROECONOMIC POLICY MARKET INTEGRATION MARKET PRICES MARKET SEGMENTATION MARKET TRANSPARENCY MUTUAL FUNDS PORTFOLIO PORTFOLIOS PRICE CHANGE PRICE CHANGES PRICE DECREASE PRICE DECREASES PRICE EFFECT PRICES RATE OF RETURN RISK AVERSION RISK EXPOSURE SALE SALES SECURITIES MARKETS SHORT SALES SPREAD STOCK PRICES STOCKS TRADERS UTILITY FUNCTIONS VOLATILITY WEALTH |
| spellingShingle |
ASSETS ASYMMETRIC INFORMATION CAPITAL MARKET CAPITAL MARKETS CONTAGION CRISIS AFFECTED DEMAND CURVE DEMAND FUNCTIONS DOMESTIC MARKET EMERGING MARKET EMERGING MARKETS EQUILIBRIUM EQUILIBRIUM PRICES EXCESS DEMAND EXPECTED RETURNS EXTERNALITY FINANCIAL CRISES FINANCIAL INTERNATIONALIZATION FINANCIAL MARKET FINANCIAL MARKETS FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SECURITIES FUTURE RESEARCH GLOBALIZATION HEDGE FUNDS INFORMATION ASYMMETRY INSURANCE INTEREST RATE INTERNATIONAL CAPITAL MARKET INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INVESTMENT BARRIERS LIQUIDATION LIQUIDITY M1 M2 M3 MACROECONOMIC POLICY MARKET INTEGRATION MARKET PRICES MARKET SEGMENTATION MARKET TRANSPARENCY MUTUAL FUNDS PORTFOLIO PORTFOLIOS PRICE CHANGE PRICE CHANGES PRICE DECREASE PRICE DECREASES PRICE EFFECT PRICES RATE OF RETURN RISK AVERSION RISK EXPOSURE SALE SALES SECURITIES MARKETS SHORT SALES SPREAD STOCK PRICES STOCKS TRADERS UTILITY FUNCTIONS VOLATILITY WEALTH Sakho, Yaye Seynabou Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile |
| geographic_facet |
Latin America & Caribbean |
| relation |
Policy Research Working Paper; No. 4076 |
| description |
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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Sakho, Yaye Seynabou |
| author_facet |
Sakho, Yaye Seynabou |
| author_sort |
Sakho, Yaye Seynabou |
| title |
Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile |
| title_short |
Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile |
| title_full |
Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile |
| title_fullStr |
Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile |
| title_full_unstemmed |
Contagion and Firms’ Internationalization in Latin America : Evidence from Mexico, Brazil, and Chile |
| title_sort |
contagion and firms’ internationalization in latin america : evidence from mexico, brazil, and chile |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2006/12/7245802/contagion-firms-internationalization-latin-america-evidence-mexico-brazil-chile http://hdl.handle.net/10986/8859 |
| _version_ |
1764406665028829184 |