Increasing Impact of Spain on the Equity Markets of Brazil, Chile and Mexico During the Neoliberal Reforms of the 1990s

Andres Rivas (1), Rahul Verma (2), Antonio Rodriguez (3), Pedro H. Albuquerque (4)
(1) Primerica, Laredo, TX, USA, United States,
(2) Marilyn Davies College of Business, University of Houston, Downtown, Houston, TX, USA, United States,
(3) A.R. Sanchez, Jr. School of Business, Texas A&M Interna????onal University, Laredo, TX, USA, United States,
(4) Aix Marseille University, CNRS, AMSE, Marseille, France, Acceleration & Adaptation, Aix-en-Provence, France, France

Abstract

The article examines stock index price responses in Brazil, Chile, and Mexico to those in the US, Spain, and four European countries during three sub-periods surrounding the neoliberal reforms of the 1990s: 1988 to 1994, 1995 to 1998, and 1999 to 2004. The methodology is empirical and uses time series analysis, in particular impulse response functions (IRFs) derived using vector autoregression (VAR) models. It finds that equity markets became more interconnected as countries opened to international trade and capital flows and that there was an increasing impact of Spain on Latin American equity markets. Stronger economic linkages (more trade and foreign direct investment) between Spain and these countries, especially in Brazil, seem to explain increased equity market interconnectedness. This study concluded that the adoption of neoliberal reforms significantly enhanced the influence of European, and especially Spanish, equity markets on Latin American markets. This has important implications for understanding the global integration of emerging markets during periods of economic liberalization. However, the study is limited by the general constraints of the VAR methodology, including potential biases due to missing control variables and the selection of subsample periods as historical benchmarks. The study limitations are, in general, the same that apply to the VAR methodology, and in particular, to missing control variables or to possible bias in the selection of the subsample periods used as historical benchmarks. To our knowledge, no other work showed that there was an increasing impact of Spain on Latin American equity markets during the neoliberal reform period by using IRFs and VAR models.

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Authors

Andres Rivas
Rahul Verma
Antonio Rodriguez
Pedro H. Albuquerque
pha@use.startmail.com (Primary Contact)
Author Biographies

Andres Rivas, Primerica, Laredo, TX, USA

Dr. Andres Rivas is Regional Vice President at Primerica in Laredo, Texas, and was Assistant Professor of Finance and Economics and Interim Coordinator of the Texas Center for Border Economic & Enterprise Development at Texas A&M International University. His research interests are international finance, banking, derivatives, and equity markets, with a particular focus on emerging markets.

Rahul Verma, Marilyn Davies College of Business, University of Houston, Downtown, Houston, TX, USA

Dr. Rahul Verma is a Professor of Finance at the Marilyn Davies College of Business, University of Houston-Downtown. His research interests are international finance, behavioral finance, and investments.

Antonio Rodriguez, A.R. Sanchez, Jr. School of Business, Texas A&M Interna????onal University, Laredo, TX, USA

Dr. Antonio Rodriguez holds a Ph.D. from the University of Alabama and has been published in a variety of business journals since 1986 and continues to conduct research primarily in finance. In addition to teaching finance and delivering seminars for over 30 years, he has served as the Chair of the Division of International Banking and Finance Studies and as an Associate Dean of the A. R. Sanchez, Jr., School of Business for more than 15 years at TAMIU.

Pedro H. Albuquerque, Aix Marseille University, CNRS, AMSE, Marseille, France, Acceleration & Adaptation, Aix-en-Provence, France

Dr. Pedro H. Albuquerque has been a researcher at the Aix-Marseille School of Economics (AMSE) since 2010 and cofounder of ACCELERATION & ADAPTATION. He holds a Ph.D. in Economics from the University of Wisconsin–Madison and a B.S. in Electrical Engineering from the University of Brasília. He also worked at the University of Minnesota Duluth, Texas A&M International University, the Central Bank of Brazil, the International Monetary Fund, and a digital technology startup. His fields of interest are technological disruptions, cybernetics, occupational science, sustainability, and international finance
Rivas, A., Verma, R., Rodriguez, A., & Albuquerque, P. H. (2023). Increasing Impact of Spain on the Equity Markets of Brazil, Chile and Mexico During the Neoliberal Reforms of the 1990s. Innovation Journal of Social Sciences and Economic Review, 5(2), 09–20. https://doi.org/10.36923/ijsser.v5i3.224

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