Impacts Of The 2008 Financial Crisis On South American Equity Markets

Abstract

This paper examines the transmission of the 2008 US financial crisis to four Latin American stock markets using daily stock returns from 2006 to 2009, analyzing returns before and during the 2008 financial crisis. The empirical evidence presents a financial integration by showing persistently higher volatility during the crisis period. This indicates that most of the stock markets in this study were severely hit by the US financial crisis. However, the evidence shows that Chile was less impacted by the 2008 financial crisis. The results here could be useful in international portfolio diversification decision-making in South American region.