Explaining the Migration of Stocks from Exchanges in Emerging Economies to International Center

38 Pages Posted: 22 Dec 2004

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Daniela Klingebiel

World Bank - Policy Unit

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Date Written: January 2002

Abstract

Claessens, Klingebiel, and Schmukler study the determinants of the growing migration of stock market activity to international financial centers. They use a sample of 77 countries and document that higher economic growth and more macroeconomic stability help stock market development. Countries with higher income per capita, sounder macroeconomic policies, more efficient legal systems, better shareholder protection, and more open financial markets tend to have larger and more liquid stock markets. The authors show that these factors also drive the degree with which capital raising, listing, and trading have been migrating to international financial centers. As fundamentals improve and technology advances, this migration will likely increase and domestic stock market activity may become too little to support local markets. For many emerging economies, the best policy is to establish sound fundamentals but not necessarily the trading, or even listing of securities locally.

This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to understand financial globalization and capital market development.

Keywords: stock market development, internationalization of financial markets, trading migration, emerging economies

JEL Classification: G15, G18, G20

Suggested Citation

Claessens, Stijn and Klingebiel, Daniela and Schmukler, Sergio, Explaining the Migration of Stocks from Exchanges in Emerging Economies to International Center (January 2002). Available at SSRN: https://ssrn.com/abstract=296960 or http://dx.doi.org/10.2139/ssrn.296960

Stijn Claessens

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Daniela Klingebiel

World Bank - Policy Unit ( email )

1818 H Street NW
Room MC 9-903
Washington, DC 20433
United States
202-473-7470 (Phone)
202-522-2031 (Fax)

Sergio Schmukler (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://www.worldbank.org/en/about/people/s/sergio-schmukler

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