Opening Up of Stock Markets: Lessons from and for Emerging Economies
Mitsui Life Finanical Research Center, Working Paper No 93-18
Posted: 10 Sep 1999
Date Written: April 16, 1994
This paper examines the benefits and risks of market internationalization by analyzing the effect of recent market openings in developing countries. We estimate changes in the return and volatility of stock prices, portfolio flows, and the volatility of portfolio flows around market openings. We find that stock prices, on average, increase upon market opening without a significant change in volatility. Furthermore, portfolio inflows to these countries are significantly positive following market openings, but without a concurrent increase in the volatility of portfolio flows; hence, the concern about "hot money" appears to be unwarranted.
JEL Classification: G15
Suggested Citation: Suggested Citation