Working Paper: CEPR ID: DP6137
Authors: Stijn Claessens; Sergio Schmukler
Abstract: This paper studies international financial integration analyzing firms from various countries raising capital, trading equity, and/or cross-listing in major world stock markets. Using a large sample of 39,517 firms from 111 countries covering the period 1989-2000, we find that, although international financial integration increases substantially over this period, only relatively few countries and firms actively participate in international markets. Firms more likely to internationalize are from larger and more open economies, with higher income, better macroeconomic policies, and worse institutional environments. These firms tend to be larger, grow faster, and have higher returns and more foreign sales. While changes occur with internationalization, these firm attributes are present before internationalization takes place. The results suggest that international financial integration will likely remain constrained by country and firm characteristics.
Keywords: Access to capital markets; Globalization of financial markets; International financial integration; Internationalization
JEL Codes: F6; G15; G18; G20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Macroeconomic factors (E66) | Degree of internationalization (F30) |
| Institutional factors (D02) | Degree of internationalization (F30) |
| Larger firms (L25) | Internationalization (F30) |
| Higher growth rates (O49) | Internationalization (F30) |
| Higher foreign sales (F23) | Internationalization (F30) |