THE EXTENT OF FINANCIAL INTEGRATION WITHIN CARICOM

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1 THE ETENT OF FINANCIAL INTEGRATION WITHIN CARICOM De Lisle Worrell and Julia Jhinkoo Picture 3 Picture 4 Presented at the L Annual Monetary Studies Conference Eastern Caribbean Central Bank Basseterre, St. Kitts.

2 AIM OF STUDY To find evidence of a trend towards greater financial integration.

3 MEASURES OF FINANCIAL. Cross border ownership of INTEGRATION USED: companies. 2. Stock market prices of cross listed firms. 3. Intra regional lending and borrowing of commercial banks. 4. Exchange Rates and Interest

4 CROSS BORDER OWNERSHIP OF COMPANIES I. Firms listed on the Stock Market. Financial Firms Of the top firms when ranked by assets value, 8 are financial institutions. Closer look at the major banks of the region reveals:

5 CROSS BORDER OWNERSHIP OF COMPANIES cont d TABNUMBER COUNTRY OF BRANCH OFFICES OF THE TOP BANKS OF THE CARICOM REGION FIRST (Listed on the Stock Exchange) SCOTICABAN K ( Canada) RB ( Canada) REPUBLIC BANK ( Trinidad and Tobago) Antigua and 2 Bermuda Bahamas 2 Barbados 8 4 Belize 9 Dominica Grenada 2 4 Guyana 5 aica 43 2 Monseratt Suriname St. Kitts and Nevis 2 St. Lucia 4 3 St. Vincent and the 2 Grenadines Trinidad and Tobago Source: Caribbean Trade and Investment Report CARIBBEAN INTERNATIONAL BANK ( Canada)

6 CROSS BORDER OWNERSHIP OF COMPANIES cont d Non- Financial Firms listed on the Stock Market. LOCATIONS OF NON FINANCIAL FIRMS LISTED ON THE STOCK ECHANGE COUNTRY Antigua Bermuda Bahamas Ansa McAl () and Barbados Caribbean Cement Co. Ltd. () Neal and Massey () Grace Kennedy (aica) Goddard Limited (Barbados) Belize Dominica Grenada Guyana aica Montserrat Suriname St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Trinidad and Tobago Source: Various annual reports of the respective companies.

7 CROSS BORDER OWNERSHIP OF COMPANIES cont d I. Firms not listed on the stock market. LOCATIONS OF SELECTED FIRMS NOT LISTED ON THE STOCK ECHANGE MARKET COUNTRY SOL Group ( Barbados) Antigua and Bermuda C.O. Williams Constructi on Ltd. (Barbados ) Bahamas Barbados Belize CL Financial Group () Sandals (aica) Super Clubs (aica) Rituals Coffee House () TYE Manufactu ring Co.Ltd. () The Beacon Holdings Ltd. () SM Jaleel () Dominica Grenada Guyana aica Montserrat Suriname St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Trinidad and Tobago Source: Various annual reports of the respective companies.

8 STOCK MARKET PRICES OF CROSS LISTED FIRMS Barbados Stock Exchange aica Stock Exchange Trinidad and Tobago Stock Exchange

9 CORRELATION STOCK MARKET PRICES OF CROSS LISTED FIRMS CORRELATION OF THE CROSS LISTED FIRMS ON THE BARBADOS AND TRINIDAD AND TOBAGO STOCK ECHANGE Companies Barbados shipping and Trading Company Neal and Massy Holdings Limited One Caribbean Media Limited RB Financial Holdings Limited Ansa Mc Al Limited

10 CORRELATION STOCK MARKET PRICES OF CROSS LISTED FIRMS cont d CORRELATION OF THE CROSS LISTED FIRMS ON THE JAMAICA AND TRINIDAD AND TOBAGO STOCK ECHANGE Companies Berger Paints Trinidad Limited Capital and Credit Merchant Bank Limited Guardian Holdings Limited National Commercial Bank of aica

11 CORRELATION STOCK MARKET PRICES OF CROSS LISTED FIRMS cont d CORRELATION OF THE CROSS LISTED FIRMS ON THE BARBADOS, JAMAICA AND TRINIDAD AND TOBAGO STOCK ECHANGE Companies First Caribbean International Bank Grace Kennedy Limited JMMB Sagicor Financial Corporation Trinidad Cement Limited

12 INTRA REGIONAL LENDING AND BORROWING OF COMMERCIAL BANKS

13 INTRA REGIONAL LENDING AND BORROWING OF COMMERCIAL BANKS

14 INTRA REGIONAL LENDING AND BORROWING OF COMMERCIAL BANKS

15 ECHANGE RATES, INTEREST RATES AND FINANCIAL INTEGRATION

16 CONCLUSION Financial Integration predominantly occurs via cross border ownership and other forms of collaboration that involve financial commitments. The cross listing of securities has made a limited contribution towards financial integration, but in most cases the stock prices move in tandem in all markets they are listed on.

17 CONCLUSION cont d From the ECCU experience we see that intra regional lending and borrowing of commercial banks is evident and this can be due to the fact that they have a common currency. Interest rates and exchange rates do not converge within CARICOM.

18 THANK YOU.

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