Financial market efficiency: global and regional financial market perspective
ISSN: 1935-5181
Article publication date: 6 January 2021
Issue publication date: 19 October 2021
Abstract
Purpose
This study examines dynamics of global and regional financial market efficiency; and how specific features of the market and other conditions influence variability in such efficiency.
Design/methodology/approach
The study employs fixed effects statistical approach in its examination of how specific features of financial markets influence variability in its efficiency.
Findings
This study finds that individual IMF defined economic regions tend to exhibits significantly different financial market efficiency characteristics given specific market features and conditions. In regional level comparative analysis (e.g. Europe, Africa, Asia–Pacific etc.) this study finds that incidence of financial market uncertainty is the dominant condition with significant effect on financial market efficiency across all the IMF regions. In the global level analysis, empirical estimates presented suggest that financial market uncertainty, financial institutional depth and financial institutional efficiency tend to have significant positive influence on global financial market efficiency all things being equal. In the same analysis however, this study finds that financial market and financial institutional access growth has significant negative impact on financial market efficiency.
Originality/value
The uniqueness of this study compared to related ones found in the literature stems from its focus on financial market efficiency at the global, and IMF defined regional block level instead of on a specific economy as often found in the literature. Additionally, in contrast to other related studies, this study further examines the role of global financial market uncertainty in its financial market efficiency analysis. Financial market uncertainty variable may be unique to this study because the variable is derived through an econometric process from a base variable.
Keywords
Acknowledgements
Global in this study defines or captures amalgamation of five specific regional economic blocks as defined by IMF namely Europe, Asia–Pacific, Western Hemisphere, Africa, and the Middle East and Central Asia; these economic blocks themselves are made of country-level entities or economies. Global has been defined as such because fundamentally, these five regional economic blocks drive the global economy.
Citation
Abaidoo, R. (2021), "Financial market efficiency: global and regional financial market perspective", American Journal of Business, Vol. 36 No. 3/4, pp. 169-189. https://doi.org/10.1108/AJB-02-2020-0025
Publisher
:Emerald Publishing Limited
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