Barclays Global Investors Canada Ltd. has announced the winner of this year’s Barclays Global Investors Canada Research Award, a $10,000 award which recognizes excellence in Canadian capital market research.

The best research paper as determined by a panel of independent judges selected by the Canadian Investment Review was written by Kai Li, an Assistant Professor of Finance at the Faculty of Commerce, University of British Columbia since 1996.

Li’s paper, entitled What Explains the Growth of Global Equity Markets?, presents an explanation of the phenomenal growth of global equity markets over the past 30 years. It hypothesizes that this expansion is due to three factors: improvements in economic fundamentals, changes in valuation technology, and a reduction in deviation from the maximum possible equity valuation. This deviation is referred to as ‘market inefficiency.’

Using data on 32 developed and developing country equity markets over the period 1974-1997, it appears that changes in valuation technology play a very important role in the growth of global equity markets. With an excellent legal, regulatory, and institutional framework, Canada’s capital market has one of the smallest market inefficiency measures among developed country stock markets.

Li has a PhD in Economics from the University of Toronto. Her research and teaching focuses on international financial markets, valuation, dual trading in futures markets, conditional event studies, Bayesian econometrics, and health economics.

Her research has appeared in Journal of Financial Economics, Journal of Empirical Finance, Journal of Econometrics, Journal of Business and Economic Statistics, Journal of Applied Econometrics, Current Issues in Economics and Finance, Economics Letters, and Research in Official Statistics.