Financial contagious in emergent countries.

Abstract

This research attempts to determine the existence of the financial contagious in an
emergent Latin-American countries sample during recent financial crisis. For doing so, the
behaviour of sovereign bond spread is studied. These are measured based on the Emerging
Markets Bond Index Plus (embi+) elaborated by JP Morgan. Likely, returns of the
bourse index are studied based on the Morgan Stanley Capital International (msci)
index. Correlations among these countries, the behaviours of the capital cash flows lead to
these markets, and the co-movements among such returns are also presented. In the results
we can mention that the evidence of the contagious is weak. Although temporal variations
correlations are hard to re-conciliate with financial and veritable factors, it is not possible
to conclude that the contagious among those countries during the analyzed periods of crisis
exits. It could be to think that the named “financial contagious” can be due to domestic
financial political errors copied through the affected countries answering to common economical
shocks affecting countries with similar characteristics.