ABSTRACT
It is generally agreed that national capital markets have become more integrated in recent years, in large part as a consequence of the trend toward financial deregulation coupled with technological developments that have greatly reduced transaction and information costs.1 Many studies have documented the benefits of improved sharing of risks, which is a decrease in cost of capital (Bekaert and Harvey 2000, Henry 2000a) and an increase in real investment (Henry 2000b, Mitton 2006, Chari and Henry 2008, Bae and Goyal 2009). Recent literature has focused on economic growth benefits associated with financial market integration (Bekaert, Harvey, and Lundblad 2001, 2005, 2009).
