Insider trading -- a punishable offence in the United States -- which increases stock market volatility, is relatively high in India, China, Russia, Venezuela and Mexico, according to a study done for the International Monetary Fund.

The Global Competitiveness Survey prepared by Julan Du, Professor at the Chinese University of Hong Kong, and Shang-Jin Wei, an Advisor in the IMF's Research Department, looked at 50 countries.

Insider trading involves the trading of stocks by people who have access to information that is relevant to the value of the company and, hence, the price of the stock.

The United States has arguably the most stringent regulations in regard to insider trading, the study notes.

While the US has expanded its definition of 'insider', in most other countries the definition is less broad.

Du and Wei say that because insider trading tends to be illegal, it is difficult to measure directly.

"You must use perceptions to estimate the degree of insider trading; you cannot count the amount of money changing hands," says Du.

Wei said that the results of their study "clearly show a positive association between the degree of insider trading and the degree of market volatility."

"Furthermore, we find the effect to be quantitatively significant. For example, the Chinese stockmarket is much more volatile than the US market. Our study suggests that the greater prevalence of insider trading in China has a lot more to do with this higher volatility than, say, more volatile economic fundamentals or economic policies in China."