How Regulation and Global Standing Shape Stock Market Co-Movements: A G20 Panel Study

Abstract

Motivated by post-2020 fragmentation and underexplored institutional-geopolitical drivers, we examine how regulatory quality (RQ) and global power (GP) shape stock-market co-movements across 17 G20 economies. We estimate time-varying correlations via ADCC-GARCH, construct a scaled correlation index, and apply panel ARDL. We find that higher RQ and stronger GP raise long-run integration; effects appear conditional rather than purely additive. Results are robust to alternative openness proxies (trade vs. GDP). Our contributions are a unified RQ-GP framework, a correlation index for integration monitoring, and policy-relevant evidence on how institutional quality and geopolitical standing condition diversification and financial stability.