Determinants of Stock Market Integration

Abstract

This chapter contains the complete multistage statistical data analysis, based on a unique database of 49 stock exchange markets around the world from 1995 to 2010, investigating the determinants of stock exchange integration and testing the relevance of possible explanatory drivers that can determine the existence of de jure stock market integration. Overall, the research confirms the complexity of the integration process, and how it depends on different macroeconomic, structural, cultural-geographical and operative forces. The final results demonstrate that financial harmonization, cross-membership agreements, for-profit corporate structure and integration openness are important factors of stock exchange fusion. By contrast, the large size of stock exchange market has a negative impact on the likelihood of successful merger.