Testing for stock market integration in a developing economy: Colombia

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Abstract

This article examines the linkage between two parallel stock exchanges trading the same shares in Colombia, namely the Bogot Stock Exchange and the Medelln 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 evidence that the location of a company's headquarters appears to matter in stock price formation.

Original languageEnglish (US)
Pages (from-to)231-236
Number of pages6
JournalApplied Financial Economics Letters
Volume3
Issue number4
DOIs
StatePublished - Jul 2007

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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