Financial interdependence or contagion? evidence from a meta-analysis

Zhang, H. C. and Mohamad, Azhar and Hamid, Zarinah (2019) Financial interdependence or contagion? evidence from a meta-analysis. Journal of Economic Cooperation and Development, 40 (1). pp. 79-102. ISSN 1308-7800

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Abstract

During the last two decades, the phenomenon of financial contagion has been investigated in numerous pieces of research. In spite of its severe implications for the stability of domestic financial systems as well as potential diversification benefits of international portfolio investment, there has yet to be universally agreed conclusion on the relevance of financial contagion. Thus, our current study has been designed to apply the meta-analysis approach to investigate the statistical significance of financial contagion based on past empirical contagion studies. Our meta-analysis concludes that financial contagion is a significant phenomenon. As implications, policy makers should establish contingent credit lines to ensure the liquidity of financial market during the turbulence time, and portfolio investors should diversify away from the potentially contagious markets. It is suggested that future contagion-based meta-analysis may include contagion studies with different methodologies, as well as meta-regression analysis to provide more insights on the sources of variability in the contagion studies.

Item Type:	Article (Journal)
Additional Information:	3334/78386
Uncontrolled Keywords:	Financial interdependence; Contagion; Meta-analysis
Subjects:	H Social Sciences > H Social Sciences (General) > H61 Theory. Method H Social Sciences > HG Finance H Social Sciences > HG Finance > HG4501 Stocks, investment, speculation
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Dr. Zarinah Hamid
Date Deposited:	14 Feb 2020 10:39
Last Modified:	14 Feb 2020 10:39
URI:	http://irep.iium.edu.my/id/eprint/78386

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