Financial contagion from China to Latin America


Financial contagion refers to the spread of adverse economic shocks from one country to another, often propelled by stock market behavior. In an integrated world, the price fluctuations of a small number of shares in one influential country can greatly affect the price of shares elsewhere or even on the entire stock market. Given China’s growing influence as a trade partner and investor in Latin America, it is highly likely that shocks affecting China’s business conditions and financial health will have major effects on the stock markets of Latin American countries.

This project has three main objectives. First, it aims to analyze the transmission of financial risk from China to emerging markets, especially in Latin America, during the Asian financial crisis (1997-1998), the Global Financial Crisis (2007-2009), and the COVID-19 pandemic. (2019-2021). The second objective is to identify the sources and direction of financial interdependence and contagion between China and Latin America, and to assess the severity of financial risk transmission. Third and finally, the project looks to document and understand the asymmetries that underpin the spread of financial risk from China to Latin America. In particular, it explores the varying individual responses of Latin American markets to the same shock originating from China.

Participating institutions:

  • Center for China and Asia-Pacific Studies

Main researchers:

Diego Winkelried

Diego Winkelried

Affiliated Researcher


Walter Bazán

Departamento Académico de Finanzas, Universidad del Pacífico

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