Testing for Stock Market Integration in a Developing Economy: Colombia

This paper examines the linkage between two parallel stock exchanges trading the same shares in Colombia, namely the Bogotá Stock Exchange and the Medellín Stock Exchange. We provide empirical evidence to support the hypothesis that these two markets can be best described as fully integrated over a period of almost four decades, which is consistent with the view that arbitrage opportunities are only possible in the short but not in the long run. In addition, we find evide

Economic integration. an overview of basic economic theory and other related issues

Este documento presenta una visión amplia de la Teoría de Integración Económica desde el punto de vista de la teoría de unión aduanera. Se argumenta que dicha teoría carece de integración y que los recientes desarrollos en el tema no parecen resolver esta falla. A pesar de esto, se sugiere que los desarrollos teóricos surgidos a partir del trabajo seminal de Viner y posteriormente desarrollados por otros teóricos, son aún útiles como herramienta de investigación empírica en el tema.

Stock return comovements and integration within the Latin American integrated market

Financial integration has been pursued aggressively across the globe in the last fifty years; however, there is no conclusive evidence on the diversification gains (or losses) of such efforts. These gains (or losses) are related to the degree of comovements and synchronization among increasingly integrated global markets. We quantify the degree of comovements within the integrated Latin American market (MILA). We use dynamic correlation models to quantify comovements across securities as well as a direct integration measure. Our results show an increase in comovements when we look at the country indexes, however, the increase in the trend of correlation is previous to the institutional efforts to establish an integrated market in the region. On the other hand, when we look at sector indexes and an integration measure, we find a decreased in comovements among a representative sample of securities form the integrated market.