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Removal of explicit barriers may not result in global pricing of investable securities if implicit barriers are important. The authors use the conditional version of the Errunza and Losq (1985) model to estimate pricing of investable indices from twenty two emerging markets. Their results show that reduction in explicit barriers in conjunction with market liberalization does not lead to global pricing. To capture the extent of departure from full integration, they use the integration index and investigate the role of implicit barriers. The evidence suggests that institutional environment, corporate governance and quality of information play a major role in globalization.
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