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Monetary and financial integration: Evidence from the EMU

In: Financial Globalization, 20th Anniversary Conference, NBER-TCER-CEPR

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  • Mark M. Spiegel

Abstract

This paper examines the impact of European Monetary Union (EMU) accession on bilateral international commercial bank lending patterns. Using a difference-in-differences methodology, I demonstrate that accession to the EMU was accompanied by a change in Portuguese and Greek borrowing in favor of borrowing from their EMU partner nations. This extends the evidence in the literature that overall international borrowing is facilitated by the creation of a monetary union, and raises the possibility of financial diversion. J. Japanese Int. Economies 23 (2) (2009) 114-130.

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This chapter was published in:

  • Takeo Hoshi & Takatoshi Ito, 2009. "Financial Globalization, 20th Anniversary Conference, NBER-TCER-CEPR," NBER Books, National Bureau of Economic Research, Inc, number hosh07-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12016.

    Handle: RePEc:nbr:nberch:12016

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    References

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    1. Andrew K. Rose, 2002. "One Reason Countries Pay their Debts: Renegotiation and International Trade," NBER Working Papers 8853, National Bureau of Economic Research, Inc.
    2. Pierre-Olivier Gourinchas & Olivier Jeanne, 2004. "The Elusive Gains from International Financial Integration," IMF Working Papers 04/74, International Monetary Fund.
    3. Besley, Timothy & Case, Anne, 2000. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," Economic Journal, Royal Economic Society, vol. 110(467), pages F672-94, November.
    4. Gian Maria Milesi-Ferretti, & Philip R. Lane, 2003. "International Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp03, IIIS.
    5. Richard Portes & Helene Rey, 1999. "The Determinants of Cross-Border Equity Flows," NBER Working Papers 7336, National Bureau of Economic Research, Inc.
    6. Lane, Philip R., 2005. "Global bond portfolios and EMU," Working Paper Series 0553, European Central Bank.
    7. Mark M. Spiegel, 2004. "Monetary and financial integration: evidence from Portuguese borrowing patterns," Working Paper Series 2004-07, Federal Reserve Bank of San Francisco.
    8. Olivier Blanchard & Francesco Giavazzi, 2002. "Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 147-210.
    9. Tullio Jappelli & Marco Pagano, 2008. "Financial Market Integration under EMU," European Economy - Economic Papers 312, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
    10. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
    11. Andrew K. Rose & Mark M. Spiegel, 2002. "A gravity model of sovereign lending: trade, default and credit," Working Paper Series 2002-09, Federal Reserve Bank of San Francisco.
    12. Canhoto, Ana & Dermine, Jean, 2003. "A note on banking efficiency in Portugal, New vs. Old banks," Journal of Banking & Finance, Elsevier, vol. 27(11), pages 2087-2098, November.
    13. Coeurdacier , Nicolas & Martin, Philippe, 2007. "The geography of asset holdings: Evidence from Sweden," Working Paper Series 202, Sveriges Riksbank (Central Bank of Sweden).
    14. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    15. Theodoros S. Papaspyrou, 2004. "EMU Strategies: Lessons from Past Experience in View of EU Enlargement," Working Papers 11, Bank of Greece.
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    Cited by:
    1. Pels, 2010. "International Asset Holdings and the Euro," The Institute for International Integration Studies Discussion Paper Series iiisdp331, IIIS.
    2. Agenor, Pierre-Richard & Aizenman, Joshua, 2008. "Capital Market Imperfections and the Theory of Optimum Currency Areas," Santa Cruz Department of Economics, Working Paper Series qt7668j94x, Department of Economics, UC Santa Cruz.
    3. Marta Gómez-Puig & Simón Sosvilla-Rivero, 2011. "Causality and contagion in peripheral EMU public debt markets: a dynamic approach," IREA Working Papers 201116, University of Barcelona, Research Institute of Applied Economics, revised Sep 2011.
    4. Kalemli-Ozcan, Sebnem & Papaioannou, Elias & Peydró-Alcalde, José Luis, 2009. "What Lies Beneath the Euro's Effect on Financial Integration? Currency Risk, Legal Harmonization, or Trade?," CEPR Discussion Papers 7314, C.E.P.R. Discussion Papers.
    5. Ruo Chen & Gian-Maria Milesi-Ferretti & Thierry Tressel, 2012. "External Imbalances in the Euro Area," IMF Working Papers 12/236, International Monetary Fund.
    6. Gajewski, Krzysztof & Olszewski, Krzysztof & Pawłowska, Małgorzata & Rogowski, Wojciech & Tchorek, Grzegorz & Zięba, Jolanta, 2012. "Integracja finansowa w Europie po wprowadzeniu euro. Przegląd literatury
      [Financial integration in Europe after the introduction of the euro. A literature overview]
      ," MPRA Paper 42482, University Library of Munich, Germany.
    7. Philip R. Lane, 2008. "EMU and Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp272, IIIS.
    8. Philip R. Lane, 2008. "EMU and Financial Market Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp248, IIIS.
    9. Schmitz, Birgit & von Hagen, Jürgen, 2009. "Current Account Imbalances and Financial Integration in the Euro Area," CEPR Discussion Papers 7262, C.E.P.R. Discussion Papers.
    10. Galina Hale, 2011. "Evidence on financial globalization and crisis: capital raisings," Working Paper Series 2011-04, Federal Reserve Bank of San Francisco.
    11. Galina Hale & Mark M. Spiegel, 2008. "Who drove the boom in euro-denominated bond issues?," Working Paper Series 2008-20, Federal Reserve Bank of San Francisco.
    12. Marques, Luís Miguel & Fuinhas, José Alberto & Marques, António Cardoso, 2013. "Does the stock market cause economic growth? Portuguese evidence of economic regime change," Economic Modelling, Elsevier, vol. 32(C), pages 316-324.
    13. Schmitz, Birgit & von Hagen, Jürgen, 2011. "Current account imbalances and financial integration in the euro area," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1676-1695.
    14. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2013. "Granger-causality in peripheral EMU public debt markets: A dynamic approach," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4627-4649.

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